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Blockchain application could lead to per-year cost savings $50-60 Bln in capital markets: BIS Research

The application of blockchain technology could lead to a per-year cost savings of $6-8 billion in KYC/AML, $30-40 billion in trade finance, and $50-60 billion in capital markets, BIS Research said in a new report.

The new market intelligence report, titled 'Blockchain Technology in Financial Services Market - Analysis and Forecast: 2017 to 2026', focuses on the various opportunities and use cases that financial institutions and blockchain technology providers could capitalize on and the cost benefits and value they could derive. It highlights the key driving and restraining forces for blockchain adoption and the role of leading market players involved in the industry.

According to BIS Research, the driving forces include the need to address the inefficiencies in existing technologies, increasing mistrust of the consumers in the financial services market in the post-2008 economic recession, and potential of various benefits such as cost-cuts, the elimination of intermediaries, the increased transparency and security among others. In addition, the financial push from financial giants along with growing support from governments and central banks are also driving the growth of blockchain technology.

"The blockchain technology could save the financial institutions over $40 billion per year in infrastructure, IT, operational, third party fee, and administrative personnel costs”, Shazlie Khan, an Analyst at BIS Research, said.

The market intelligence and advisory firm, in particular, underscored the recent selection of IBM by seven European banks (Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit) to build blockchain in the area of trade finance as a pivotal change for the future of blockchain industry. Faisal Ahmad, Chief Analyst at BIS Research, said that this agreement marks one of the first real-world blockchain use cases in financial services, and will pave the way for further development and expansion of the technology across the globe.

The authors have analysed the global market for the key blockchain applications including KYC/AML processes, Syndicated Loans, Capital Market, Asset Management, and Insurance. According to the report, the per-year cost savings resulting from the technology in:

  • KYC/AML is $6-8 billion and blockchain implementation is expected in 2018-2020
  • Trade Finance is $30-40 billion and blockchain implementation is expected in 2017-2019
  • Insurance is $40-50 billion and blockchain implementation is expected 2022 onwards
  • P2P Payments is $3-5 billion and blockchain implementation is expected in 2016-2019
  • Capital Markets is $50-60 billion and blockchain implementation is expected 2020 onwards
  • Syndicated Loans is $10-15 billion and blockchain implementation is expected in 2018-2022


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