With all the hype around blockchain, capital market leaders need a way to separate the myths from reality.

The financial services sector has always been among the early adopters of new technology. One such new technology is the blockchain. To get an idea whether all the excitement surrounding this technology is warranted, Accenture has conducted an in-depth analysis of the impact of blockchain specific to investment banks. In this series, I will discuss our findings and the insights we gained from them.

Blockchain has arrived

Blockchain, the technology behind the digital currency Bitcoin, is a new type of database system which enables multiple parties to share access to the same data, virtually at the same time, with an unprecedented level of confidence. 

This distributed ledger technology has received lots of attention in recent history. And for good reason; with some analysts likening blockchain’s disruptive potential to that of the Internet, dramatic efficiency gains, immense cost savings, and substantially reduced risk seem plausible.

However, there is also a lot of hype.

Does blockchain really have the potential to boost profit and reduce risk for investment banks?

The long-term opportunity

Most business models today are structured around data reconciliation. However, because everyone maintains their own data, the process is full of inefficiencies, such as the need for different parties to constantly message data back and forth between them to get things done.

And herein lies the opportunity of blockchain. This technology 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. 

With blockchain’s potential realized, decommissioning of large parts of processes and data infrastructure could be possible. While getting to this final stage will likely take time and involve multiple iterations, the significant potential for cost and efficiency gains should continue to fuel interest and investment. 

But do these potential benefits hold up under scrutiny? To separate fact from fiction, Accenture worked with the top benchmarking firm McLagan to conduct an in-depth impact analysis and make fact-based estimates on the tangible costs/benefits, business applications, and return of investment (ROI) blockchain can actually provide.

In my next post, I will give you an overview of our study design, the results, and the insights and implications we gained from it.

In the meantime, I invite you to take a look at our Blockchain Value Analysis report. In addition, you may find our report on Three technologies that are changing the financial services game useful.

 

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