Blockchain technology may bring up to US$12bn in annual savings to the world’s largest investment banks, study says

Blockchain, the distributed ledger technology behind cryptocurrency bitcoin, could help slash infrastructure costs by an average 30 per cent a year at eight of the world’s 10 largest investment banks, a new study shows.

That would translate to between US$8 billion and US$12 billion in annual cost savings for those banks, according to a joint analysis by global consultancy Accenture and operations-benchmarking specialist McLagan.

Richard Lumb, Accenture’s group chief executive for financial services, told the South China Morning Post that blockchain is a type of database system that organises information in secure blocks that are “chained” together in an essentially unbreakable sequence using encryption.

“What’s unique is how the chain is used; instead of running as one central database, copies of the blockhain are spread out among users and kept in parallel on different computers,” Lumb said. “Users are constantly verifying the accuracy of the information on the growing chain.”

He pointed out that “the underpinnings of blockchain -- a foolproof ledger of data that are easily trackable and transparent – is now attracting the attention of more than just cryptocurrency users”.

“Think about it: from financial services to healthcare, and from energy to education, the ability to safely, securely and transparently record and store data in a decentralised and distributed database is only just beginning to be understood but its potential use is significant,” he said.