Prepare for a bright future. Image: BrendelSignature
Deloitte’s most recent Banking Industry Outlook report asks the question: are you ready to re-imagine the future of banking?
The report predicts that the new world of payments will be blockchained, direct, and seamless.
Deloitte estimates the value of global transactions at $26 trillion annually, but points out that the systems that facilitate that unthinkable sum are inefficient, antiquated, and incapable of satisfying worldwide demand. The report notes that competition to innovate in payments is fierce and has drawn powerhouses like Apple, but distributed ledger technology is the most important, transformative force in payments infrastructure.
Citing Ripple’s partnership with Santander as an example, Deloitte points out that every major financial institution is exploring blockchain or distributed ledger technology as a way to simplify all payments processes including trade finance, cross-border remittances, and payments reconciliation.
Deloitte’s advice for financial institutions is unequivocal:
“First and foremost, invest strategically in innovation by partnering, hiring, crowdsourcing, and piloting. Ramping up efforts to explore blockchain technology, and innovating rapidly to create new use cases will be a key determinant of success.”
This is not an idle pursuit of banks interested in new technology; Deloitte projects that blockchain innovations will be the most transformative change in the payments system for the next ten years. Their prediction is that all payment volumes will increase dramatically by 2025, spurred by Internet of Things (IoT) digital payments and direct corporate payments. Changes to payment infrastructure can facilitate increased volume, while decreasing fee margins. Decreasing the need for intermediaries can reduce costs, while increasing access around the world.
However, progress is never simple in a field as complicated as global finance. Deloitte warns in no uncertain terms:
“In our view, while the promise is real, the path to actualizing the potential will not be easy. There is simply too much legacy overhang in making this transition. It will take enormous effort on a collective basis to migrate to a blockchain-based trading and settlement infrastructure.”
Ripple Insights takes the long view of fundamental changes to banking technology. Banks conquered their ‘legacy overhang’ by employing that same enormous effort to offer ATM service, ACH transactions, and online banking. Each time, doomsayers predicted that automation would decimate revenue and kill jobs. Each time, advances in technology have increased overall transactions by making financial services available to more customers faster, inexpensively, and across the globe.
With all this in mind, Ripple is ready to re-imagine the future of banking. Again.
Download the full report here.
