Santander: Blockchain Tech Can Save Banks $20 Billion a Year
Blockchain technologies could reduce banks' infrastructural costs by $15-20bn a year by 2022, a new report from Santander InnoVentures claims.
The FinTech 2.0 Paper, produced in collaboration with Oliver Wyman and Anthemis Group, says distributed ledger technology could save banks money by eliminating central authorities and bypassing slow, expensive payment networks.
Beyond payments, its authors identify other areas of potential for distributed ledgers, noting:
"In time, distributed ledgers will support 'smart contracts' – computer protocols that verify or enforce contracts. This will lead to a wide variety of potential uses in securities, syndicated lending, trade finance, swaps, derivatives or wherever counterparty risk arises."
Blockchain technology could also increase investor confidence in products whose underlying assets are opaque or where property rights are made uncertain by the role of central authorities, the report says.
Other "attractive features" of the technology include transaction irreversibility, near-instantaneous clearing and settlement and a reduced margin of error, as individual transactions are openly verified by a community of network users.
"Commercial banks, central banks, stock exchanges and major technology providers, such as IBM and Samsung, are all exploring the potential uses of distributed ledgers [...] It is only a matter of time before distributed ledgers become a trusted alternative for managing large volumes of transactions."
The publication of the report follows Santander InnoVentures managing principal Mariano Belinky's statement at the FutureMoney conference that distributed ledgers have the potential to "transform" banking as we know it.
Speaking to CoinDesk in April, Belinky claimed bitcoin's underlying technology would gain mainstream traction sooner than the digital currency itself.
Santander InnoVentures' report on blockchain tech is the latest contribution to what is considered to be a growing trend among mainstream banks.
Just last month, the Euro Banking Association (EBA), released a report which stated that distributed ledgers had the potential to lower costs, increase speed and improve product offerings.
Similarly to Santander's report, the EBA publication highlighted that cooperation among Payment Service Providers (PSPs) and the crypto community was necessary as it would determine the future relationship between traditional banks and the '2.0' sector.
Piggy bank image via Shutterstock.
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