These three banks are poised to benefit from blockchain

By August 9, 2016Bitcoin Business
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The equity research arm of the bank released a note last week that reiterated the potential benefits of blockchain technology for financial services and outlined which global banks are well positioned to take advantage of the technology.

Credit Suisse noted that blockchain technology can help banks cut costs, better manage risk, more cheaply and easily achieve compliance, and target new sources of revenue.

  • Goldman Sachs. The bank sees blockchain as one of the most important developments in technology, according to Credit Suisse. It is well positioned to benefit from blockchain thanks to a combination of significant investment in technology, an open minded approach to innovation, and select investments in blockchain startups, including payments firm Circle. Goldman Sachs was one of the founding members of the R3 consortium which aims to investigate and develop blockchain-based solutions for use in financial services.
  • JPMorgan. Like Goldman, JPMorgan's significant spend on technology and related talent put it in a good position to benefit from blockchain, according to Credit Suisse. It has been testing a blockchain based system to make USD transfers between London and Tokyo since February this year, which could start being used for live transactions later this year. JPMorgan is also a member of R3, the Hyperledger Project, an non-profit organization dedicated to blockchain based collaboration, and has invested blockchain startup Digital Asset Holdings.
  • Santander. The Spanish bank 's VC arm has invested in blockchain-based startups Ripple, Elliptic, and Digital Asset Holdings. It's currently testing a cross-border payments app based on the technology. However, Credit Suisse notes that the bank likely has more pressing concerns in the form of profitability issues.This means it will likely take longer for Santander to reap the benefits of its blockchain strategy.

Blockchain technology, which is best known for powering Bitcoin and other cryptocurrencies, is gaining steam among finance firms because of its potential to streamline processes and increase efficiency. The technology could cut costs by up to $20 billion annually by 2022, according to Santander.

That's because blockchain, which operates as a distributed ledger, has the ability to allow multiple parties to transfer and store sensitive information in a space that’s secure, permanent, anonymous, and easily accessible. That could simplify paper-heavy, expensive, or logistically complicated financial systems, like remittances and cross-border transfer, shareholder management and ownership exchange, and securities trading, to name a few. And outside of finance, governments and the music industry are investigating the technology’s potential to simplify record-keeping.

As a result, venture capital firms and financial institutions alike are pouring investment into finding, developing, and testing blockchain use cases. Over 50 major financial institutions are involved with collaborative blockchain startups, have begun researching the technology in-house, or have helped fund startups with products rooted in blockchain.

Jaime Toplin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain technology that explains how blockchain works, why it has the potential to provide a watershed moment for the financial industry, and the different ways it could be put into practice in the coming years.

Here are some key takeaways from the report:

  • Spending on capital markets applications of blockchain is expected to grow at a 52% compound annual growth rate (CAGR) through 2019, according to Aite Group, to reach $400 million that year.
  • Banks and major financial institutions are working both collaboratively and independently to develop blockchain tech. Over 50 major financial institutions are involved with collaborative blockchain startups, like R3 CEV or Chain. And many are investing in the technology on their own as well.
  • Putting blockchain to use for real-world transactions is likely not that far off. If working groups' tests are successful, firms could be using it to transact real value as early as the end of this year and we could see widespread industry application within the next few years.

In full, the report:

  • Examines the funding increases that are pouring into blockchain
  • Assesses why blockchain is becoming so popular and what factors are driving up increased research and development
  • Explains in full how blockchain technology work and what assets make it valuable and vulnerable
  • Identifies pain points in the financial industry and profiles how various firms are using blockchain to solve them
  • Demonstrates the challenges to mainstream adoption and their potential solutions

To get your copy of this invaluable guide, choose one of these options:

  1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
  2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of blockchain technology.

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