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<\/figure>\n\n\n\nAn example of the impact blockchain technology has on settlement and clearance procedures would be the Utility Settlement Coin, or USC. The USC specifically targets the use of blockchain technologies by traditional banks, attempting to harness the emergent technology as a tool for more streamlined and efficient transactions. The USC has already garnered backing from multiple banks, including the likes of BNY Mellon, Deutsche Bank, Santander, Barclays, CIBC, Credit Suisse, HSBC, MUFG, and State Street.2<\/sup><\/a><\/p>\n One of the most vital and highly-regulated elements of banking is customer identity verification, or Know Your Customer (KYC). The purpose of global KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal persons or groups for money laundering or otherwise illegal activities. Related to this purpose, KYC guidelines also enable banks to better understand their customers and their financial dealings in order to better manage their institutional risks.<\/p>\n Banks usually seek to achieve the following to please their KYC controls:<\/p>\n\n\n\n This is an inordinate amount of information to gather about every single person a bank does business with, and individuals aren\u2019t bound to operating with only one bank. Because of this, banks could benefit from a shared digital utility to record customers\u2019 identities and keep them updated.<\/p>\n With the development of blockchain technology, banks now have the opportunity to invest in blockchain for identity verification. As a proof of concept, Accenture recently worked with Microsoft to develop a solution to the identity problems faced by over 1.1 billion individuals all over the globe.3<\/sup><\/a> These 1.1 billion people lack traditional identification documents, such as the kind that would be used in KYC protocols. The project, known as ID2020, is a public-private partnership aimed at making digital identity a reality through a technology-forward approach that will leverage secure and well-established systems. The jump from ID2020 to blockchain identity verification for banking could very well be within reach.<\/p>\n Syndicated loans \u2013 loans offered by groups of lenders to single borrowers \u2013 allow the individual lenders in the syndicate to spread their risk and gain a stake in investment opportunities that may otherwise be too large for their individuals capital bases. These syndicates can be slow-moving, as many parties need to collaborate and communicate in order for all the checks and balances to be properly completed. For example, the average syndicate loan transaction in the US currently takes banks 19 days to settle.4<\/sup><\/a><\/p>\n\n\n\n Identifying the need for change, a consortium arranged by Credit Suisse in 2016 announced the development of a project to demonstrate how blockchain technology could be used to improve the syndicated loan market. Members of the project included R3 consortium members BBVA, Danske Bank, Royal Bank of Scotland, Scotiabank, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale, State Street, U.S. Bank and Wells Fargo; with AllianceBernstein (AB), Eaton Vance Management, KKR and Oak Hill Advisors also involved in the initiative. These stakeholders all brought important market knowledge, process experience and testing resources to the project.5<\/sup><\/a><\/p>\n According to Emmanuel Aidoo, Head of Blockchain at Credit Suisse, blockchain technology is \u201cthe perfect vehicle for managing the lifecycle of loans.\u201d He says a key challenge is to find a way for separate blockchains to talk to each other, ensuring changes to a loan\u2019s ownership can be quickly reflected across all systems.<\/p>\n The initiative involved each of the agent banks providing a \u201cgolden source record\u201d of the loans they administer, which could then be accessed by other lenders.<\/p>\n According to a study performed by Accenture Consulting, adoption of blockchain infrastructure by the study\u2019s focus group of eight investment banks could save them US$8 billion of their estimated US$30 billion spend on operational, risk and finance systems.6<\/sup><\/a> These savings could be spread across many fields, but the below are some of the most prevalent savings, and how they would come about:<\/p>\n\n\n\n Accenture\u2019s study was performed in early 2017, and they admit that the savings estimations could have been conservative at that point.<\/p>\n Here\u2019s what they base that belief on: In late 2015, Aite Group, an independent research organisation focused on financial services, forecast that blockchain spending among capital markets players in 2016 would be around US$125 million.7<\/sup><\/a>\u00a0However, in mid-2016, a study by Greenwich Associates, an independent benchmarking research firm, predicted that 2016 blockchain spend by capital markets firms would be closer to US$280 million.<\/p>\n The Accenture report claims that \u201cthere is compelling evidence that blockchain could radically reduce, if not entirely eliminate, many existing clearing and settlement processes\u201d, as well as saving billions of dollars a year, reducing time windows, and impacting cost dynamics.<\/p>\n With such a large, far-reaching and well-established industry such as banking being so affected by the rise of blockchain technology, it may seem safe to assume that no industry is safe from disruption. It now falls to current and future business leaders to realise the potential blockchain technology holds for business, and harness the power to create the next big initiative.<\/p>\nBlockchain a boon for identity verification<\/h4>\n
Blockchain shakes up loan market<\/h4>\n
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<\/figure>\n\n\n\nBlockchain and investment banking<\/h4>\n
Blockchain\u2019s potential effect on all business<\/h4>\n