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Blockchain will “fundamentally alter” global finance

A report from the World Economic Forum says that blockchain “will fundamentally alter the way financial institutions do business around the world”. The report, The future of financial infrastructure, says that new processes and architecture will be based on blockchain rather than radical fintech innovation or new currencies such as bitcoin.

The report looked at six areas of financial services: insurance, payments, market provisioning, investment management, capital raising, and depositing and lending. It analysed how processes in each area could be transformed by blockchain technology. It also considers how other emerging technologies in the industry, such as biometrics, cloud computing, cognitive computing, machine learning, quantum computing and robotics, will combine with blockchain to drive further transformation.

Global payments will change

The report suggests that some key banking activities will be replaced by processes based on blockchain, including:

  • international payments and wire transfers;
  • mortgage repackaging; and
  • bank financial reporting to regulators.

The graphic below shows the areas considered in the report.

Blockchain to enter 'finance bloodstream'

The World Economic Forum also considers a scenario in which blockchain could enable the creation of an inter-bank, fiat currency, which could facilitate money transfers. The report suggests that “such process innovation would cause blockchain technology to enter the finance bloodstream”.

More integration ahead

Giancarlo Bruno, head of financial services industries, World Economic Forum, said: “It will help build innovative solutions across the industry, becoming ever more integrated into the structure of financial services, as mainframes, messaging services and electronic trading did before it.”

CTMfile: Global payments is the main area that is likely to affect corporate treasury. If, as the WEF report suggests, blockchain can provide a cheaper, securer and more accessible system for making international payments, this could save companies huge amounts.

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