"Big Three" management consultancy firm McKinsey & Company has argued that blockchain technology is gaining slower traction with retail banks due to regulatory hurdles and a conservative consumer environment.
McKinsey reportedly characterized retail banks as nervous and cautious when it comes to blockchain, as distinct from their ostensibly more adventurous investment banking counterparts.
Factors contributing to this difference include, McKinsey argues, a more stringent regulatory environment for consumer finance and the controversial reputation of blockchain-based decentralized cryptocurrencies such as bitcoin.
The success of existing disruptor payment services such as Zelle is ostensibly slowing the adoption of new blockchain-powered solutions, the authors claim.
Despite this, McKinsey argues that retail banks could see significant gains across multiple applications - including processing remittance payments, managing Know Your Customer compliance, fraud prevention and risk assessment - were they to embrace blockchain.
The consultancy firm estimates that $4 billion could be saved annually by adopting blockchain solutions for cross-border payments, with an additional $1 billion to be saved per year in on-boarding costs for new clients.
In regard to fraud, blockchain applications could reduce losses by up to $9 billion, the report claims.
Thus despite the slower inroads the technology has made to date in the sector, McKinsey notes its clients are shifting their tune and beginning to explore how to implement the technology within their business - in contrast to their earlier focus on battling crypto-associated risks.
The report proposes that to encourage adoption, the exchange between fiat currencies and digital assets should be smoother so as to prevent the risk of volatility-related losses for consumers.
As previously reported, a McKinsey report from January of this year argued that there remains scant evidence of practical, scalable use cases for blockchain and characterized the technology as relatively unstable, expensive, and complex.
Major Consultancy Firm McKinsey Says Retail Banking Sector Slow to Adopt Blockchain
Published on Jun 7, 2019
by Cointele | Published on Coinage
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