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Bitcoin flipping

Embracing blockchain can help investment banks save $12 billion per year

Gabriela Motroc

A new report by Accenture suggests that the technology behind Bitcoin could help investment banks slash costs by up to $12 billion per year by 2025.

Accenture’s newly-launched report titled Banking on Blockchain (co-written with top benchmarking firm McLagan, a business unit of Aon plc) claims that blockchain could offer investment banks “a lifeline.” The technology behind Bitcoin “could enable a progression from today’s multiple and sequential data reconciliation models to a much more efficient process in which reconciliation is an integral part of the transactional process.”

After mapping over 50 operational cost metrics from McLagan’s data against Accenture’s High Performance Investment Bank model, they concluded that financial reporting expenses could reduce by 70 percent. At the same time, compliance costs could diminish by 30-50 percent if investment banks embrace blockchain. Business and centralized operations could also benefit from the use of blockchain.

We estimate that investment banks spend around two-thirds of their IT budgets supporting legacy back-office infrastructure, plus $billions more each year on cost reduction initiatives.

The authors of the report also emphasize that they are not suggesting “blockchain is a panacea to remedy all the ills of investment banking. For many use cases, conventional database structures or processes will achieve a similar outcome without the costs and challenges of a blockchain solution. Examples include internal automation, staff reduction and outsourcing/offshoring. However, there is compelling evidence that blockchain could radically reduce, if not entirely eliminate, many existing clearing and settlement processes.”

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Author
Gabriela Motroc
Gabriela Motroc is editor of JAXenter.com and JAX Magazine. Before working at Software & Support Media Group, she studied International Communication Management at the Hague University of Applied Sciences.