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Blockchain Technology Could Save Banks $12 Billion a Year (silicon.co.uk)
Mickeycaskill quotes a report from Silicon.co.uk: 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.
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 arguably a disadvantage. How would you feel about a bank that made all of your transaction records public? Some countries, like Switzerland for example, actually go as far as to legislate bank privacy. Finally, the public ledger does nothing by itself to create trust between parties. The main thing that people either don't understand or choose to ignore in all of this blockchain hype is that blockchains were initially created to solve a very specific problem with digital cash that has unique or at least uncommon characteristics relative to other data storage problems. Most of the other blockchain applications that I've heard of, including this one, look more like solutions in search of problems. They don't do anything that we need that cannot be done either more easily or cheaply with existing and well tested alternatives, like relational databases with ACID guarantees (yeah, transactions matter in banking).