The blockchain has potential to drastically cut transaction costs while improving the security, transparency and auditability of transactions, Standard Chartered chief innovation officer Anju Patwardhan wrote in a blog posted on LinkedIn. Patwardhan is the latest in a string of financial industry executives to voice support for blockchain technology as a potential disruptive force for transforming financial services.
“If this takes off, prices for trading, money transfers, remittances, credit cards and other products could potentially be undercut drastically to the benefit of customers,” Patwardhan wrote in a post titled, “Blockchain – a disruptive force for good?”
In addition, as firms are facing increasing regulatory pressure to prevent money laundering, the distributed ledger technology that underpins bitcoin could make transactions more transparent and easier to monitor and track, she said.
“With the use of blockchain technology, each leg of the transaction can be recorded and traced, making the ultimate destination and use of the funds clearer,” Patwardhan wrote.
The technology could potentially also create secure digital audit trails in trade finance, which has historically been very paper-intensive, she adds.
The number of financial services executives that have publicly expressed interest in blockchain or bitcoing-related technology has grown steadily over the past year. Citigroup is reportedly testing its own bitcoin-like cryptocurrency as well as three separate systems that use blockchain distributed ledger technology. Nasdaq is incorporating blockchain technology in its Nasdaq Private Market. Barclays is partnering with bitcoin company Safello on a new payment platform. The CIOs of UBS and BNY Mellon have both discussed experimenting with the technology, and the list goes on.
Patwardhan notes that not only banks, but financial regulators in some countries are beginning to see the promise of this technology, with both the Bank of England and the Monetary Authority of Singapore having made statements about the possible impact of distributed ledger technology