- [ ] Banks have long been aware that blockchain and distributed ledger technology could be a game changer for the industry. From settlement to cross-border payments to syndicated lending, there are a wide array of services that could be improved with the use of this type of secure, fast, and programmable technology.
- [ ] Blockchain technology can allow for services to be available 24/7, with fa
ster transaction speeds, and lower transaction processing costs. McKinsey estimated that “blockchain-based solutions for customer onboarding can create up to $1 billion of savings in operating costs for retail banks globally and reduce regulatory fines by $2 billion to $3 billion. In addition, [they] expect blockchain solutions to reduce annual losses from fraud by $7 billion to $9 billion.”
- [ ] Until this letter, US banks could only develop private or permissioned blockchains, a costly and labor-intensive endeavor with few advantages over traditional distributed databases. Using public blockchains will allow banks to develop services using blockchains more simply and quickly, and with the ability to scale almost immediately.
- [ ] Although easier than building a private blockchain, connecting public blockchains into a bank’s complex systems requires extensive research, development, and testing. The biggest question is “What chain or chains best serve the needs of the bank?”
