Substantial cost savings are anticipated in cross-border payments, know-your-customer (KYC), anti-money laundering (AML) and trade finance processes driven by blockchain technology according to McKinsey.
Blockchain, or distributed ledger technology, keeps a digital record of each transaction that occurs across trading partners – including buyers, sellers, their banks and goods carriers – all of which can see all and only the documentation relevant to their part of the transaction.
Mckinsey reckons distributed ledgers will cut US$110 billion of costs in the global financial services industry over the next three years as the technology is applied to critical points across the sector.
Blockchain will have a material impact in the next three years on the industry, which will have widely adopted distributed ledger technology in five years time according to the global management consulting firm.
Cross-border business-to-business payments may benefit the most, with savings of up to US$60 billion due to lower fees from service providers in the transaction process.
Savings across the global trade finance industry may amount to a US$14 billion revenue boost as blockchain abolishes time-consuming paper-based processes.
Other areas that will see substantial cost savings include KYC and AML processes, as well as ID fraud says Mckinsey.It reckons that banks will have spent as much as US$400 million in adopting blockchain solutions by 2019.
Categories: Trade Based Financial crimes News