The impact of blockchain on baking is assessed in a new study from CBI insights. The study is titled “How Blockchain Could Disrupt Banking”, and it takes a look at the impact of digital ledgers and digital currencies on the established banking sector.
There are six major areas, called out in the report, where blockchain could have an impact upon traditional banking models. These are:
The disruption arises here through the elimination of intermediaries to approve transactions between consumers. This means blockchain technology could lead to faster payments at lower fees than banks. This is particularly attractive for lowering the cost association with cross-national border transactions.
Clearance and Settlement Systems
In this context, digital distributed ledgers have the potential to reduce operational costs and bring customers closer to real-time transactions between financial institutions. Moving money around the world creates a number of logistical problems; the report suggests these can be addressed through blockchain, keeping track of all transactions publicly and transparently.
Companies operating blockchain would have faster access to liquidity via initial coin offerings. This would deliver a new, cryptoeconomic model of funding that opens up new streams of access to capital, and circumvents the need for traditional financial services. This presents a new and more direct model, for blockchain companies can skip the conventional fundraising round and selling tokens directly to the public.
The report suggests that by tokenizing securities like stocks, bonds, the implementation of blockchain is disrupting the structure of capital markets.
Loans and Credit
Through the elimination of established financial institutions in the loan and credit industry, blockchains can create alternative and secure ways to borrow money and with it potentially lower interest rates.
While these advantages are there for the taking, the report also notes the blockchain remains in its infancy and there remain several technological issues to overcome for blockchains to operated smoothly. The questions for traditional banks are: ignore this, offer alternatives, or work with start-ups and play a part in the change process.