Commercial banks are keen to explore the use of blockchain technology for cross-border transactions, says a recent report from Accenture.
In fact, nine out of 10 banking banking professionals surveyed at large commercial banks in the U.S., Europe and Canada, said theirbanks are currently exploring the technology. Overall 32 top commercial banking professionals from 11 of the top 20 U.S., Canadian and European banks, participated in the survey.
The use of blockchain for payments will reduce costs, speed payments, reduce errors and drive new revenues, the report, “Blockchain Technology: How banks are building a real-time global payment network” said.
Thirty percent of banks are in the advanced stages of adopting blockchain technology for payments – with executives indicating that they are either “at the forefront of the revolution” (17 percent), or “engaged in production implementation” (13 percent);
Seventy percent of banks are still in the early stages of adoption, with 30 percent “involved in proof-of-concepts with other companies,” 27 percent still “formulating a strategy” and 13 percent “looking into the technology.”
“Cross-border payments are ripe for innovation using blockchain and distributed ledger technologies,” said Richard Lumb, group chief executive – Financial Services at Accenture. “The technology could resolve inefficiencies and friction that have long driven up the costs – and the time – required to move money around the world.“
The survey found the most prevalent use cases for blockchain technology within payments are intra-bank cross-border transfers (44 percent ranked as the number one priority), with a secondary focus on cross-border remittances, corporate payments and inter-bank cross-border transfers.
Most executives felt blockchain would help lower frictional and administrative costs, create quicker settlement time with fewer errors and exceptions, and provide greenfield revenue opportunities through innovative new products and services based on this transformative technology offered to bank customers.
However, half of the bank executives surveyed say they recognize the challenges associated with integrating and implementing blockchain technology. This is primarily due to regulatory (63 percent) and compliance (56 percent) concerns that have caused internal resistance to blockchain adoption. Nearly one-third of executives surveyed highlighted security as another impediment.
Richard Meszaros, Connected Commerce lead in Accenture Digital and co-author of the report, said, “For many executives, the value proposition for blockchain is not yet clear enough and top decision-makers have insufficient understanding of the technology. Providing education to employees and executives continues to be critical for the near-term.“
Meszaros also said the broad success of blockchain in payments hinges upon industry collaboration to create supporting networks that include banks and non-banks.