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The Use of Blockchain Technology could Save US$6 Billion a Year

According to a Goldman Sachs report, the use of blockchain technology for clearing and settlement in the cash equities market could save banks around the world US$6 billion a year, mainly through lower headcounts and back office IT costs. While the execution of cash equity trades has been streamlined over the years, the post-trade process remains complex and expensive, and could benefit from the use of distributed ledger technology to eliminate duplicative confirmation steps, shrink the settlement cycle and cut risk, says Goldman in its 'Profiles in Innovation' report.

In the U.S. alone, the new technology could lead to savings of up to US$2 billion a year, partly by eliminating trading errors. Goldman estimates that about 10% of all trading volume currently ends up needing some expensive manual intervention but argues that this would be fixed if blockchain was used to enforce agreement at the time of entry. Goldman also predicts in the report that the blockchain technology could lead to global savings of between US$3 billion and US$5 billion a year in anti-money laundering compliance by boosting transparency and efficiency, with better data quality cutting the number of falsely identified suspicious transactions.

News Characteristics

Date : May 27, 2016
Region : North America
Industry : Banks
Function : Operations and IT
Sub-Function : IT Modernization/Transformation