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Blockchain Technology Could Save Banks $12 Billion a Year ( 109

Mickeycaskill quotes a report from Accenture research has found Blockchain technology has the potential to reduce infrastructure costs by an average of 30 percent for eight of the world's ten biggest banks. That equates to annual cost savings of $8-12 billion. The findings of the "Banking on Blockchain: A Value Analysis for Investment Banks" report are based on an analysis of granular cost data from the eight banks to identify exactly where value could be achieved. A vast amount of cost for today's investment banks comes from complex data reconciliation and confirmation processes with their clients and counterparts, as banks maintain independent databases of transactions and customer information. However, Blockchain would enable banks to move to a shared, distributed database that spans multiple organizations. It has become increasingly obvious in recent months that blockchain will be key to the future of the banking industry, with the majority of banks expected to adopt the technology within the next three years.
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Blockchain Technology Could Save Banks $12 Billion a Year

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  • What could possibly go wrong...
  • by Anonymous Coward

    Blockchain - worth billions.

    Did any bank invent it? nope.

    Innovation does not come from encumbents.

  • Sounds familiar (Score:5, Insightful)

    by quonset ( 4839537 ) on Tuesday January 17, 2017 @08:20PM (#53686221)

    I remember, back in the day, when ATMs were first proposed. They would save the banks soooo much money. They could have fewer employees since now their customers could get to their money whenever they felt like it. There would be less paperwork, shorter lines, the benefits were endless.

    Which is why you are now charged to get your own money if you're not using your own bank's ATM.

    I wonder what money-grabbing scheme banks will implement if they start using blockchains?

    • by AK Marc ( 707885 )
      How could the monetize blockchain? Blockchain is used here to mean "secure central account data back-end". It's hard to charge a user for a back-end system.
    • by DogDude ( 805747 )
      You should use a credit union. They're non-profits, so they generally don't try to fuck you, like banks do.
    • by ls671 ( 1122017 )

      Easy: a new encryption fee, justified by the fact that encryption is CPU intensive and cost a lot of electricity.

    • It'll be something. That $12b in savings might also cost them the ability to manipulate transactions in order to generate billions in fees.

      Not that they bear the burden of that $12b. We get to do that for them (where do you think those ATM fees came from?), plus a little extra, because banks treat us like shit and there's nothing we can do about it. They inflate their costs and pass them directly onto us - so saving money might actually lower profits. If something cost them $12b, they were probably c

    • Which is why you are now charged to get your own money if you're not using your own bank's ATM.

      Really? That is legally allowed where you live?

  • by SeaFox ( 739806 ) on Tuesday January 17, 2017 @08:26PM (#53686269)

    Unless I own a bank, it's not like I, as a regular consumer, will see any benefit. The savings are all going to go into the pockets of a few fats cats who don't really need the extra money anyway.

  • In case you don't remember, the last time a brilliant silicon valley idea to speed up bank transactions was implemented on a massive scale, it directly led to massive mortgage fraud that was an important factor in destroying the economy in 2008 and leading to the Great Recession. I refer to the robo-signing scandal where some folks decided the old fashioned way of doing mortgages was too slow, so why not have bank employees just use a computer to rubber stamp mortgage paper work and overlook all those littl

  • by edibobb ( 113989 ) on Tuesday January 17, 2017 @09:00PM (#53686531) Homepage
    This is about investment banking, not the retail banking most of us use. You remember investment banks, don't you? The ones that were too big to fail a few years ago after branching out into areas with little or no regulation?
    • Where's the harm in having too big to fail entities with little/no regulation keep track of all their information in a blockchain. It's not like there's a possibility of a disagreement about who owns that $1billion asset. Oh well, too big to fail, the taxpayers should just buy an additional copy of that asset so they each have one.

  • Wow, what a great idea! (irony). Literally one database corruption (see recent pot data corruption posts) could wipe whole nation's savings.
    • by ASDFnz ( 472824 )

      In a 'blockchain' scenario each entity keeps their own copy of the chain that is cryptographically put together.

      If somehow one participant does manage to corrupt their copy of the chain it is instantly detected (bad cryptographic chain) they can resemble it from the other participants (once again, cryptographically so they don't actually need to trust that the other participants are giving them the right information).

      • by ebyrob ( 165903 )

        Yeah, it's a great time to break out new cryptographic technology to a giant slow-moving market. It's not like there's anything on the horizon [] that could cause a problem [].

        • by ASDFnz ( 472824 )

          Quantum computing is indeed a challenge that needs to be met sooner or later, there are a lot of theories about how to protect cryptography but as your links point out quantum computing is still in its infancy and without working prototypes we are still not sure what we will and will not be able to do.

          Worst case scenario (and quite likely) just about every form of cryptography we have today is in jeopardy and if we don't react quickly enough the entire internet let alone things like blockchains are going to

          • I don't think any of the bulk encoders are susceptible. It's just sharing of keys and verification of identity that won't work. I do realize that these are not minor issues.

  • by batkiwi ( 137781 ) on Tuesday January 17, 2017 @10:34PM (#53686909)

    Bitcoin/litecoin/dogecoin/etc attempt to solve the trustless peer to peer model.

    A multi-bank blockchain implementation would not use a trustless model, it would be a trusted model where the sender and receiver both sign the transaction, and it is then added to the blockchain for consumption by all participating banks.

    It's a way to share an immutable (without retracting ALL transactions before the transaction to be deleted) ledger, in this case between trusted parties.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      The computation and storage burden for maintaining a block chain is not zero. In fact, it can even be more than it otherwise would be in a more conventional data store such as a relational database. Bitcoin, Litecoin and Dogecoin solve this problem by paying the maintainers in the form of newly created units of digital currency. Banks already have the government granted power to create currency by booking assets and lending against them, so there's nothing for them to gain there. Having a public ledger is a

    • ...'tis one of the many reasons the likes of the Bank of England have been developing their own 'e' currency. They'll run the show, so you won't get to do anything unusual, but you'll still get the benefit of 'e' money transfers/payments etc. It seems like an attempt to 'get with it', but really its a way to make you think you're getting something new and good, whilst still maintaining the status-quo.

    • Importantly, Bitcoin is vulnerable to one party gaining control of over 50% of all hashing. With banks trusting each other, and nobody else allowed to produce hashes, this problem is essentially no longer there. I'd quietly commented to friends it was only a matter of time before banks start doing something like this.

  • Every time I see blockchain proposed to replace existing processes I see few remarks on the investments required to set up a "shared, distributed database that spans multiple organizations".

    I'm pretty sure the regulators will require these databases to have a high level of security (which is built in, blockchain adepts will say), a high level of resilience (per bank, not as a 'distributed' system). This will drive up cost.

    On top of that, a distributed database of investment transactions must be able to hand

  • saving money (Score:4, Insightful)

    by Tom ( 822 ) on Wednesday January 18, 2017 @04:06AM (#53687889) Homepage Journal

    Actually working in the banking business instead of gambling in the stock exchange casino would save banks hundreds of billions. No wait, scratch that, it would save taxpayers hundreds of billions.

  • If the savings is just 12 billion dollars, the banks will not bother. They make that much between breakfast and lunch probably. If it ever levels the playing field ever so slightly, they won't do it. Even if there is the merest whiff of suspicion of a suggestion about the probability of giving small banks a couple of molecules of benefit, the big banks will spend 12 billion to thwart it.

    The motto, the dream, the hope, the aspiration of every bank is to become so big no one else can compete, and to divert

The intelligence of any discussion diminishes with the square of the number of participants. -- Adam Walinsky