More than $150 billion in revenue at risk for banks that cannot overcome technical, adoption hurdles of digital currency – Bain & Company

“Change will not come easily for banks,” said Glen Williams, who leads Bain’s global payments sector and co-authored the report. “They recognize that distributed ledger technology has the potential to improve the speed, transparency and efficiency with which payments are made, but the current market structure gives them a powerful incentive to stay the course.

About $300 trillion of transactions flow through these networks each year, creating significant revenues for banks. Further, network dynamics make it hard for alternatives to scale up: participants will not join a network until it has sufficient reach, but reach comes only from widespread participation.”Banks’ initial responses to fast-moving developments in digital currency – appointing mid-level technology executives to industry consortia, participating in the conference circuit and running limited distributed ledger simulations – have left them flat-footed.

Lack of a clear path forward is particularly problematic for international payments and trade finance, where distributed ledgers have the greatest near-term potential for disruption.By cutting the number of middlemen and enabling direct transactions between counterparties in international correspondent banking, distributed ledger solutions speed up transaction times. They also ensure that each participant has a complete view of its customer accounts and balances – the key building blocks of automated payment-tracking and notification tools. Finally, distributed ledgers may also significantly reduce costs, including the capital tied up in the correspondent banking network, and error rates.

Source: More than $150 billion in revenue at risk for banks that cannot overcome technical, adoption hurdles of digital currency – Bain & Company