Blockchain reduce costs
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- What is the Future of Blockchain in Banking?
- The Three Ways Blockchain Can Optimize Business Costs
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- FactorPlat: Digital Platform for Supply Chain Financing
- Blockchain Deployments to Save Banks More Than $27bn Annually by 2030
- How Blockchain Cuts Costs in Supply Chain Management
- Singapore and Australia Conclude Blockchain Trial Aimed to Reduce Transaction Costs
- Using blockchain to drive supply chain transparency
- Can Blockchain reduce supply chain complexity and costs?
What is the Future of Blockchain in Banking?
FW: How would you describe the potential for blockchain technology to disrupt the global financial system? To what extent could its functions, features and underlying principles prove revolutionary? The structure of blockchain and its constancy means that it is believed by most that it is not possible to make alterations to the underlying data after they have been registered in a distributed database. This results from a key facet of blockchain: decentralisation. In other words, individual network components that address transaction authenticity are not connected within a communal server and are thus viewed as being both independent and autonomous.
As an example, each Bitcoin block is verified by more than 10, nodes. Data protection in the blockchain is afforded through an access key created by the author. Wherever alterations are made to the block, the prior access key is neutralised and this is communicated to all of the users of the network who may, by majority action, stop any further unauthorised activities.
This, in turn, disallows changes to the information registered in the blocks. These features are a completely new approach to verifying and safely storing data.
This is what makes the technology disruptive; blockchain is increasingly being used as a more secure medium to transfer money via the decentralised technology and to secure banking records more efficiently. For very similar reasons, another area potentially ripe for blockchain disruption is real estate, where the technology could be used to streamline the process of escrow.
Sales : Avoiding intermediaries could be the most disruptive power of blockchain technology. It can be used by financial services organisations in any transaction which involves the storage of data requiring third-party verification. Since blockchain technology is able to prove the existence of a document at a specific time, it could potentially replace intermediaries such as notaries. Blockchain simplifies and reduces costs stemming from cross-border financial transactions.
For example, in , Banco Bilbao Vizcaya Argentaria BBVA , implemented a Bitcoin-based system that made 50 transfers between Mexico and Spain in a few seconds, whereas usually each movement of funds would take up to four days. Therefore, international payments can be made faster and cheaper — approximately 80 percent cheaper according to BBVA.
Blockchain technology can also be used with smart contracts which are automatically enforceable. This makes it possible to obtain a program that will always act the same way without requiring the goodwill of a third party or interpretation of any kind.
In an era with strict and tight legal requirements, a reliable system to speed up the closing of transactions may have a significant impact on the financial industry. Prentice: As a relatively new and advancing technology, distributed ledger technologies DLTs and blockchain is also finding its way into many uses and applications in sectors other than finance — for example insurance, health, education and capital markets services. The core principles of the technology mean that the potential for blockchain and its reach is endless.
The smart contracts on a blockchain, which execute automatically, will transfer title to goods and money, remove the need for banks to provide documents such as letters of credit, which drastically cuts out the middlemen and their fees, and create a trusted network of assured authority concerning the origin of the goods and products being supplied.
By way of another example, British music artist Imogen Heap pioneered the distribution of digital payments for her music through a blockchain platform using smart contracts. Haas: The impact on intermediaries and also certain types of infrastructure in the financial industry will be the most significant, at least in the next few years. If you think of the process behind payments, or certain aspects of securities trading or clearing of derivative trades, there seems to be quite a bit of room for improvements in efficiency.
That is even more pronounced if the transaction crosses borders. There are a number of intermediate steps in payments and transfers that distributed ledger technology will allow us to skip in the future — or, if not skip, automate. The service providers along the way of these transfers will have to prove again how and why they are adding value in the process. Not all of them will be able to do that.
I think smart contracts will need a few more years to have a real impact. I am also less optimistic in terms of the self-executing properties. The higher the level of sophistication of these contracts, the more potential for interpretation. After all — why should lawyers be able to do with code, what we have not been able to accomplish with language; namely, create a document that has all the answers?
I am not even sure that is desirable. That being said, in areas where contracts are mostly about sequencing steps in a logistically complex transaction, rather than allocating risks for unforeseen scenarios, smart contracts will rapidly gain in importance.
FW: How would you characterise the ways in which financial services companies — across banking, capital markets, asset management and insurance, for example — are experimenting with blockchain projects? What gains are being made in terms of efficiency, transparency and security? Sales: Although at a very early stage, financial institutions in Spain have already carried out several projects using this technology.
Blockchain technology was used in the whole process, from the beginning of the negotiations to the execution of the documentation. Some of the most relevant banks in Spain, such as Bankia and CaixaBank, among others, have launched a consortium in order to improve Know Your Customer KYC proceedings so that clients can be identified easier and faster, which is a general concern for all financial entities.
Banco Santander has recently experimented with a project involving blockchain technology to exchange funds among financing entities. The technology is similar to the one used in Bitcoin. Haas: In Germany, I think all banks are looking at this very intensely but are approaching it very carefully. Much of the focus is on improving internal processes, but this year has brought the first couple of customer-facing transactions. Commerzbank used blockchain technology in a foreign exchange transaction with Thyssen Krupp, and even in a commercial paper issue that was done in parallel using blockchain and conventional means.
These transactions certainly signal a breakthrough, but if you look at the news in the financial community relating to the use of blockchain technology, I would say there are still more announcements of banks joining a certain platform or signing up to a certain protocol than releases about transactions actually executed on these platforms or using these protocols. However, I think that will change quickly in the coming months.
Banks and insurers are significant venture investors in the FinTech area and want to make sure they have access to the winning new technologies and put them to use. They are handpicking the customers and transactions for first application now, and then they will roll out the technology more broadly. This report concluded that DLTs are not yet sufficiently mature to provide the core for the next generation of real-time gross settlement RTGS service and therefore the Bank of England sought to explore and understand the feasibility of connecting blockchain firms to its renewed RTGS in order to support settlement in systems operating on innovative payment technologies, such as DLTs, and facilitate payment infrastructures in accessing the central bank.
According to Mark Carney, the Bank of England Governor, renewed RTGS is expected to play an important role in opening access to central bank money and the Bank of England is continuing to explore the demand for introducing synchronised settlement to the renewed RTGS service. In the UK, experimenting has gone beyond the banking sector.
In the insurance sector, fraudulent claims, fragmented data sources and slow manual processes, together with legacy underwriting models, are some of the biggest challenges facing the industry. Blockchain offers control, transparency and traceability for each claim, and could eventually lead to automatic payouts. Blockchain can also be used to record the origin and ownerships of ships, cars, homes and other assets, helping to reduce fraudulent claims and improve risk modelling for the insurance sector.
Munich, AXA, Allianz, Zurich and Aegon, among many other insurers, have already launched the Blockchain Insurance Industry Initiative, known as B3i, to explore the potential of using DLTs within the insurance and reinsurance industry for the benefit of all stakeholders in the value chain, including end customers. As the platform would provide an overview of all markets, regulators have an opportunity to become aware of systemic risks enabling appropriate action at the policy level.
The new platform is intended to reduce global trade barriers and increase efficiency across international supply chains, bringing to market a trade platform for containerised shipping which connects the entire supply chain ecosystem. In September , Maersk completed a week trial of marine insurance based on blockchain and partnered with EY, Microsoft and several insurance companies to try to securely share shipping data on a blockchain.
IBM started the above collaboration with a view to connecting ports, terminals, customs authorities, shipping lines and inland transportation, and so on. It involves various security-enhancing technologies to bolster cheque authenticity. This is achieved through a quick response code printed on each page of new cheque books. This is an early example of how blockchain is being integrated into bank infrastructure and how it is expected to streamline issuance and trading.
FW: How might blockchain address certain financial system inefficiencies and loopholes, such as the growing complexities of distribution, disparate regulations covering international transactions and delays in sharing transaction details? Sales: Blockchain technology can be used to simplify processes and reduce the time needed to execute transactions. FTL successfully tested registration of an issuance of warrants.
This trial proved that it is possible to carry out the issuance process in 48 hours as opposed to an average time of more than a week.
This was possible thanks to the interconnection of the systems, the automatic validation of requirements and transparency for all parties involved. Inefficiencies within the current stock market system were already addressed in the United States. In May , Citigroup and Nasdaq announced the launch of a new tool to enable payments through blockchain technology. Spain may follow a similar pattern. Also, as regards issues stemming from delays in recording and reconciling stock exchange transactions, it should be noted that blockchain technology solves them by continuously tracking the transaction in all of the ledgers.
Third parties or intermediaries may no longer be needed. Haas: I think distributed ledger technology can add the most value where transactions require a frequent exchange of information or where certain occurrences trigger subsequent steps to be taken by parties who are not themselves in a position to confirm the event that needs to occur first. The former is the reason why syndicated lending has caught the attention of IT developers, and the latter why international trade finance is an area where people are looking at blockchain-based solutions.
In both areas, the nature of the transactions allows for significant efficiency gains. These efficiency gains, in my view, are the key drivers for this technology. Regulatory loopholes, or disparate regulation, will not be significant drivers of development in the longer term. While that is a factor in structuring initial coin offerings ICOs , these are a niche phenomenon.
The market for commercial-use is in servicing traditional players, meaning regulated financial institutions, integrating blockchain technology into their service offering. To the extent they contract with independent third-party providers for this, these providers will legitimately find locations where regulators do not make it difficult for them to operate, but whatever they do, still needs to be done in a way that works for regulated entities as the direct contractual parties.
In the end, much of the financial industry is built on trust, and no technology changes that. Prentice: The current system used by banks of a single, centralised ledger requires each participant to synchronise their systems used to track and manage the life cycles of their financial transactions, through a process known as reconciliation, which involves teams of people in each bank checking with their counterparts in other banks to make sure everything matches.
A common solution to this is through the use of a decentralised ledger, whereby participants each share the single, centralised ledger. Distributed ledgers synchronise thousands of computers in a distributed network via the internet. SWIFT provides messaging, standards and services to connect banks to their counterparties globally to transact securely, reduces costs and risks in securities and foreign exchange transactions, and provides enhanced security for corporates.
The SWIFT interbank messaging platform has been exploited in certain respects to perpetrate fraud, and this has resulted in delays in or cancellation of numerous transactions. Consequently, many experts have called for implementation of end-to-end processes via blockchain using multiple simultaneous authentication points to seek to address this risk.
With respect to disparity in regulations, I do not see blockchain being front and centre in addressing those. It may help connect disparate data; however, it seems to me unlikely that it will assist in delving into the nuances of regulations in order to assist with comparative analysis or harmonisation.
FW: Conversely, what risks could widespread adoption of blockchain technology present? Sales : Risks of adoption of blockchain technology would include issues related to security, volatility, automatic enforcement of agreements, deregulation and its potential use in illicit activities. Blockchain technology has proved vulnerable to hacker attacks. Special attention should be placed on security breaches related to cryptocurrencies because it is the area where blockchain technology has experienced the greatest deployment and is used by millions of people.
Furthermore, there is a risk related to recognition of blockchain technology as proof in a Spanish court, because it has not been accepted so far. By contrast, in July , a Chinese court considered that the registration of information in the chain of blocks offers a timestamp that is admissible as evidence in court in a case concerning copyright protection, understanding that the characteristics of the technology allow an unalterable registration from a specific moment in time.
The automatic enforcement of smart contracts can be a risk too.
The Three Ways Blockchain Can Optimize Business Costs
And it will change the way your suppliers, customers and competitors do business. Which means, in the next five years, it will change the way you do business too — whether you like it or not. As a business engaged in delivering efficiency for our clients; blockchain is an extremely interesting technology for us. Now and in the future, the core principles of blockchain— security, transparency, visibility and surety— will be key to delivering the most efficient solutions to our clients, regardless of who they are and what they want to achieve. Blockchain will not solve all of the supply chain headaches, but there are several reasons why it has the potential to be a game-changer in terms of both time and cost, when implemented and scaled correctly. Download our essential guide using the form on the right. You can also find quick reference material below.
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New technologies are presenting promising opportunities for improvement across the supply chain. Using blockchain in the supply chain has the potential to improve supply chain transparency and traceability as well as reduce administrative costs. A blockchain supply chain can help participants record price, date, location, quality, certification, and other relevant information to more effectively manage the supply chain. The availability of this information within blockchain can increase traceability of material supply chain, lower losses from counterfeit and gray market, improve visibility and compliance over outsourced contract manufacturing, and potentially enhance an organization's position as a leader in responsible manufacturing. Deloitte recommends: Using blockchain in the supply chain can help participants record price, date, location, quality, certification, and other relevant information to more effectively manage the supply chain. Bitcoin, the earliest blockchain implementation, triggered widespread experimentation of blockchain particularly in financial services. As blockchain gains publicity, large corporations and startups are exploring uses of the technology outside of the financial services industry.
FactorPlat: Digital Platform for Supply Chain Financing
Select your location Close country language switcher. We can help facilitate new product development — designing new financial infrastructures and instruments or innovating on incumbent solutions — and assist you with integration into blockchain networks public, private or consortium. Blockchain technology has demonstrated the potential to universally reshape the way business transacts across nearly every industry in the global economy. As the technology and its use cases continue to evolve and progress, blockchain is empowering enterprises to drive greater transparency, traceability and operational efficiency for a multitude of business transactions and contracts. Our mission in the blockchain business at EY is to put in place all the tools, systems and services that will be needed to help companies take advantage of this technology and drive enormous productivity gains as a result.
Blockchain Deployments to Save Banks More Than $27bn Annually by 2030
Times Internet Limited. All rights reserved. For reprint rights. Times Syndication Service. Here's how blockchain reduces the overall costs associated with trade Advertisement.
How Blockchain Cuts Costs in Supply Chain Management
After getting familiar with how blockchain applications can be used in their business, most have no idea what the cost implications could be. This key information is vital in making budget plans for exploring blockchain applications solutions. This article will consider the cost implications of adopting blockchain applications for business solutions. We will look at two sides of the coin — How blockchain applications help save costs and the costs involved in adopting the technology. History shows that the bond of a community is as strong as the trust members have in each other. Where trust is lost, things fall apart and the centre can no longer hold. Achieving such trust is probably easy when you have only people involved. The answer is simple: a transparent ledger for recording transactions.
Singapore and Australia Conclude Blockchain Trial Aimed to Reduce Transaction Costs
The Australian Border Force ABF , the Infocomm Media Development Authority of Singapore IMDA , and Singapore Customs, along with industry participants, have concluded a blockchain trial to prove trade documents can be issued and verified digitally across two independent systems, reducing cross-border transaction costs. The blockchain trial was initiated as part of the Australia-Singapore Digital Economy Agreement to make cross-border trade simpler between the two countries. QR-codes embedded with unique proofs are inserted into digital Certificates of Origin COO , enabling immediate verification for authenticity and integrity of the document when scanned or machine-read. A key success of the trial is the acceptance of verifiable COOs by a regulatory authority, Singapore Customs.
Using blockchain to drive supply chain transparency
FW: How would you describe the potential for blockchain technology to disrupt the global financial system? To what extent could its functions, features and underlying principles prove revolutionary? The structure of blockchain and its constancy means that it is believed by most that it is not possible to make alterations to the underlying data after they have been registered in a distributed database. This results from a key facet of blockchain: decentralisation.
Can Blockchain reduce supply chain complexity and costs?
Skip to Main Content. A not-for-profit organization, IEEE is the world's largest technical professional organization dedicated to advancing technology for the benefit of humanity. Use of this web site signifies your agreement to the terms and conditions. Smart contracts are the programs that get executed automatically on the Blockchain when the pre-set conditions are met. Ethereum is one of the world's largest platforms for creating decentralized applications. In Ethereum, gas in Ether, Ethereum cryptocurrency is used to pay miners for using their resources and running the smart contracts.
Discover how blockchain changes organisations. The blockchain system is a digital register of transactions that allows creating a secure chain for transactions. These transactions are assembled in blocks. Its main benefits include immutability of data, keeping the records intact, eliminating fraud, and improving compliance.
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