The banking sector may soon face an ‘adopt or perish’ scenario when it comes to the Blockchain technology. With the increasing adoption of Bitcoin and digital currency technology across industries, the banking sector has fallen behind, in spite of their recent investments into the development and implementation of blockchain technology based applications.
According to reports, the banking sector is not concentrating enough on the actual development, testing and implementation of distributed ledger technology. Instead, they have been going around in circles by confining their blockchain related activities to attending related events and conducting few trials. Most of the banks are currently clueless about how to go forward with the implementation of this technology.
Bain and Company, the leading global management consulting firm predicts that the banking sector may see a drastic drop in the revenues if they don’t pull up their socks and get back into the blockchain game in a much more serious fashion. Otherwise, the blockchain based alternatives for cross-border transactions will eat into the markets currently controlled by conventional banking and financial organizations.
The head of Bain’s payments team in the EMEA region David Gunn says,
“The wave of investment in digital currency start-ups clearly signals that payments channels are attracting a new degree of interest, and new competitors are changing customer expectations. Innovation is upon us, and doing nothing is not a viable option. Now is the time for banks to move from experimentation to action.”
The banks will be able to further improve their performance by reducing the costs involved in their trade finance operations. By using blockchain technology based applications, banks will be able to cut down the costs associated with manual documentation handling, checking, error correction and more. It will also ensure faster clearing of financial instruments.
However, unless the banking sector is willing to take few hard decisions and embrace the change, they will be under threat from emerging technologies in the near future, if not immediately.
Ref: Finextra | Image: Investopedia