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Blockchain Tech To Save Investment Banks $12b Per Year

Operational costs at leading investment banks could be cut by as much as $12 billion per year as a result of blockchain technology, according to a report by industry commentators Accenture.

As blockchain technology moves from research into pre-market testing in 2017, investment banks could be rapidly approaching significant cost savings throughout their functions, including compliance and financial reporting costs, as a result of adopting distributed ledger technology.

The report signals more good news for the blockchain, the technology behind decentralized currencies like Bitcoin. As governments, banks and companies from across industry sectors turn increasingly to opportunities in the technology, it looks set to have a significant positive impact on processes across different industries.

The managing director of Accenture’s blockchain division, David Treat, said the potential cost savings alone were more than enough to justify increased investment in blockchain research.

"Given the tremendous cost of data reconciliation — which is part of every aspect of the capital markets industry — it's no surprise that we've seen a significant amount of investment in blockchain technology."

According to the report, financial reporting costs could see a reduction of at least 70 percent, with investment banks able to draw on raw data from the blockchain to meet these requirements. Similarly, compliance costs could be reduced up to 50 percent from current levels, giving rise to significant cost savings for banks and other financial companies.

This combines with analyst forecasts of applications in a range of other industries, which suggests blockchain could be a hugely significant development in business processes and systems more widely.

By introducing greater data handling efficiency, security and transaction handling, the distributed ledger technology looks primed to replace existing systems across a wide range of industries, from financial services to shipping and agriculture.

With governments, central banks and private interests devoting significant time and money to blockchain research and development, it looks to be a matter of time before these new systems can be implemented.

Accenture’s report also highlighted the improvement in customer identification and anti-money laundering processes, all of which could combine to the significant advantage of investment banks in the near future.