Daily Management Review

Moody's finds what banks will profit the most from blockchain


04/17/2018


The blockchain technology will significantly reduce costs and risks for banks, but at the same time will limit their commission income, analysts of the international rating agency Moody's state in a latest review.



MarkMoz12 via flickr
MarkMoz12 via flickr
According to a number of experts, the blockchain technology can significantly optimize costs of business and the state. In particular, it helps to make payments online, promptly confirm relevance of customer or transaction data, register transactions and maintain their registry.

"Banks could greatly benefit from development and implementation of the blockchain technology in terms of increasing efficiency, reducing costs and lowering risks. But the introduction of these technologies will also limit amount of commissions and profits from foreign exchange transactions, which in turn will affect revenue," the survey says. 

Advantages of using the technologies will be individual for each bank, and will depend on the current structure of costs and revenues of the financial institution and its readiness for change.

The researchers say that blockchain will be appreciated by banks with a large volume of cross-border transactions as estimated time of the transaction and the risks of such transactions can be significantly reduced.

On the other hand, financial organizations, which depend on the commission income (received for the processing of transactions), will feel a negative effect. 

The agency specifies that Swiss banks more than others risk from introduction of the blockchain technology, since 50% of their income falls on the commission. A slightly smaller negative effect will be felt by Italian, Canadian and Israeli banks, whose profits from commissions account for about 35% of revenues. Banks in the Asia-Pacific region are the least reliant on commission income, says Moody's.

source: moodys.com






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