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.

Comments

... move to a shared, distributed database ...

[Anonymous Coward]

What could possibly go wrong...

Re:... move to a shared, distributed database ...

[omnichad]

It's also very hard to have privacy.

Re:... move to a shared, distributed database ...

[Jeremi]

unless, of course, you manage to get a majority of the people to record it incorrectly... but gee, that's impossible, right?

Nothing's impossible. However, the relevant question would be, is it harder to subvert a blockchain-based system (where you need subvert "a majority of the people") than the current system (where you need to subvert only one person, as long as it is the right person)?

Re:... move to a shared, distributed database ...

[magarity]

unless, of course, you manage to get a majority of the people to record it incorrectly... but gee, that's impossible, right?

I do hope you're being sarcastic; it's easy to imagine an implementation of replication with a security hole that allows a falsified entry to propagate to all the nodes quickly and efficiently.

Re:... move to a shared, distributed database ...

[Gorobei]

If you broadcast something everywhere, and people record it everywhere, it's very hard to go back and forge the past of that decentralized record.

True, but proof-of-work blockchains are a *really* expensive way to achieve the goal. It is far cheaper to have both parties just cryptographically sign a transaction and keep a copy themselves or even post it to a public repository.

Blockchains solve the double-spend problem. Great, but banks don't typically have that problem in the first place because the currency is not the record.

Sounds familiar

[quonset]

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?

Re:Sounds familiar

[Motherfucking Shit]

It's hard to charge a user for a back-end system.

Said no bank executive, ever.

Re:Sounds familiar

[DogDude]

Sounds interesting! Care to share what this secret credit union is? Google doesn't show any credit unions with 260B in assets. The largest seems to be Navy Federal, with ~70-80B in assets.

Re:Sounds familiar

[Desler]

No it's not. It's just listed as an obscure fee in your account contract that most will never read.

Why should I care again?

[SeaFox]

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.

Re:Why should I care again?

[JonnyCalcutta]

Actually, this has happened in the UK. I don't think it was legally forced but was more a suggestion from Government ("do it voluntarily or we'll force you"). The reasoning was a bank account is a basic requirement of living in the UK and not having one was making life more expensive for poorer people.

The banks don't push them so you have to ask. And like you suggest you get none of the bullshit - no overdraft, no credit but full online banking, over the counter, etc. And on the plus side, you get no overdraft, no credit and hence no charges.

Re: Innovation, absence of, banks from

[Qzukk]

When incumbents get fat and lazy and start slowing everything down, they become encumbents.

Re: Innovation, absence of, banks from

[ls671]

You should at least tell him how to spell it correctly:

encumbanks

INVESTMENT Banks

[edibobb]

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?

Re:INVESTMENT Banks

[Actually, I do RTFA]

Both can be true. I have no doubt that there are elite groups within the government who could track me with a satellite 24/7 or have me die of natural causes within hours of the order being given. I also have no doubt there are many people who are less competent. But then again, only 10% of any organization is competent, so...

Blockchain != trustless p2p

[batkiwi]

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:Blockchain != trustless p2p

[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 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).

saving money

[Tom]

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.