To attract the general public, blockchain must surmount several major challenges, such as the user experience that is sometimes complicated when buying or handling bitcoins. However, the key challenge is likely to be the confidence gained from potential users.

Additionally, the study predicts that those who come through the best will be those who have succeeded in creating a very important trust capital and capitalizing on it. The study relied on historical information from 8 of the 10 largest investment banks globally and sought to figure out the type of consequence of using blockchain on costs. Accenture concluded that this technology would achieve about 30% savings in operational costs through streamlining and reducing certain functions.

The blockchain platform is the one that will have to demonstrate extreme robustness to date, as it has never been hacked since its initiation. It does not necessarily need to undergo the scrutiny faced by Bitcoin, especially because there are other cryptocurrencies. The business of bitcoins being copied could be explained by the fact that there are sites hosting bitcoins that have been duplicated, but not the blockchain platform itself.

This is good news for investment banks that are increasingly looking to reduce their costs to better value their advice and increase their returns to commercial banks. In addition to the use of bank support purposes, blockchain could also be used for data management, such as the cost of index reproduction, thus increasing data quality and lowering transaction costs. The most important feature of this platform could simply be explained to potential customers, showcasing what they would gain by using the service, without the need to qualify the details of the technology used.

For this reason, many banks have invested in this new technology since 2014, announcing that they will work together on a blockchain application in international trading. Similarly, the Wall Street clearinghouse DTCC also published a report suggesting that their project will use blockchain in the clearing process. But this technique, which relies in particular on the encryption of data, must be clearly understood by the banks but also by the regulators, the latter still being in the observation phase.

According to the announcement of DTCC, without going so far as to predict the end of banks, the idea that a certain number of banking functions may disappear in the near future for the benefit of actors using blockchain is a possible upcoming scenario, but everything will depend on the use proceedings, since the transfer of money abroad seems very promising, for example.

It highlights, in particular, “the very low intermediation costs of services based on bitcoin, compared to bank charges.” However, due to powerful regulatory barriers, particularly on credit activities at the heart of the banking business, it predicts, above all, the development of cryptocurrencies in countries where money is poorly controlled and where cryptocurrencies can function as a safe haven. More generally, in the short and medium term, cryptocurrencies and blockchain are of particular interest to developing countries and groups of people that do not use banking services.

It is also necessary to add that assorted trends come together at the same time and call for a redefinition of the role of banks. First of all, the crisis of lasting confidence, inactive due to crises and various cases, corresponds to a certain ideological antagonism of the original Bitcoin community confronted with financial institutions. After that, the technological world and the growing number of startups in the financial sector are positioned on the financial market, bursting.

Under this polymorphic pressure, which is constantly gaining in resources and visibility, traditional financial players are involuntarily forced to change their practices. Projects based on blockchain that is spreading all over the markets of developed countries are a major trend that is quickly changing automatically by conventional actors, who sometimes struggle to adapt.

For their part, the banks do not remain in remission in any case and try to turn the threat into an opportunity. The method adopted is generally the same and consists of incentivizing the suitable technology to adapt it within actual systems, by developing actual private or partially private blockchains, or by cooperating with startups in the blockchain ecosystem. This manner of operation describes quite asymptotically the state of mind of the banks, forced under the threat of cooperating, but also to conduct more or less indiscreet internal scientific research in order not to be surpassed by technology.

To continue control over their systems, experiments are accumulated around private blockchains, where only a limited number of players can record transactions or have the registry. Public blockchains are more complex to use for banks that do not want to lose control of their content and must comply with regulations such as Know Your Customer (KYC), which is not compatible with the character of transactions on a public blockchain, where the privacy of a customer is one of the key principles.

Regarding the situation within the private blockchain, for example, where the connections would be concentrated in a few selected associations or even within the different sections of the same bank, the attraction of the blockchain for the bank is simply cutting back in costs. According to a 2015 Santander report, the use of blockchain could save banks 15 to 20 billion dollars a year by 2022, thanks to a reduction in “infrastructure costs related to international payments, trading, and compliance.”

The blockchain could, for example, help them administer clearing and clearinghouses, which are complex, are concentrated, and can take two and a half days to guarantee complete clearing. At the same time, blockchain transactions would be more reliable and quicker, with lower transactional costs.

This article is part of the academic publication Dividing by Zero by Ana Nives Radovic, Global Knowledge 2018