Category Archives: bank

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Study: Blockchain Can Save Banks $27 Billion per Year by 2030

Market intelligence firm Juniper Research has published the results of its blockchain study, with the findings showing financial institutions are set to save USD 27 billion annually by 2030 should they utilize the technology.

The cost reduction for cross-border settlement transactions is shown to be reduced by over 11% when deployed on blockchain.

#Blockchain deployments to save #Banks more than $27bn annually by 2030, with cost reductions not just in #Payments processing and reconciliation, but in treasury operations and compliance. #Fintech #Banking

Read more in our press release: https://t.co/pNWXeopbjO pic.twitter.com/pYk2PYsISQ

— Juniper Research (@juniperresearch) August 1, 2018

The Future of Blockchain: Key Vertical Opportunities & Deployment Strategies 2018-2030 study also investigates alternative areas where the technology could create more cost-effective practices, including in treasury operations. The savings applicable for banking departments varies; in areas of compliance, automated money laundering checks via blockchain could create a 50% price decrease in just a few years.

Internal banking legacy systems that will most likely be required to run alongside any blockchain tech services may, however, cause the savings process to take several years to be fully implemented. Estimated service cost savings are not expected to reach USD 1 million per annum until 2024.

The full research paper can be purchased from Juniper online.

5 industries benefiting from blockchain

Besides the banking industry, the report notes the benefits of utilizing blockchain technology in a number of other sectors, including food exports and trades, as has been seen in a number of cases already including in the Australian sugarcane industry. The report estimates a nearly 50% cut in the food industry’s costs associated with fraud.

Juniper Research has also released a free white paper detailing five industries that will benefit from blockchain, including land registry, healthcare, and the automotive sector, entitled ‘5 Industries That Will Fuel the Blockchain Boom’.

It splits the research into eight key regions, including the key challenges each industry will face on the way to adoption and the top movers and shakers of the blockchain sector in 2018.

 

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South Korean Banks Initiate Blockchain-Based ID System

The Korean Federation of Banks (KFB), a group of South Korean commercial banks, has announced that a new blockchain-based ID initiative dubbed ‘BankSign’ will be implemented in July later this year.

The initiative will replace the massively outdated current system that has been in place for 20 years that has resulted in an enormous number of fraudulent activities, described by local news outlet Korea Joongang Daily as “notorious for its complexity and inconvenience“.

Blockchain solution

Park Chang-ok, a manager at the department of deposit services and payment systems at KFB described BankSign as giving financial institutions the option to ”choose from in verifying consumer identity, not just the public certification system“.

A spokesperson for KFB explained, ”[It is] the first project co-developed by the local banking sector utilizing blockchain technology. While BankSign will start off by providing the service in the banking sector, we will work with the government and other public organizations to expand its usage.”

The project has been built on the Nexledger blockchain, created by Samsung specifically for businesses. Development began in November 2017, with beta testing following in April 2018.

The current system

The system at present requires a number of identity checks to take place before goods and services can be purchased online in South Korea, with users required to download several security programmes that are only usable on the device they are directly downloaded onto.

While the active software was modern in 1996, there are several reported challenges it now faces. The programmes may slow down computer systems, only working on Internet Explorer for desktop users.

In addition, the outdated technology has led to an estimated 80% of users information compromised in 2014. Research Gate conducted a study the same year that estimated national losses due to these hacks between USD 10 billion and USD 40 billion.

 

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Circle Attempting US Banking License

Cryptocurrency exchange Circle is seeking a banking license from the federal government of the United States. If successful, this would be the first cryptocurrency exchange that becomes an official bank in the United States, which would be a major milestone for the cryptocurrency world.

Becoming a bank would give Circle some important benefits, such as being able to access the central banking system without intermediaries which would allow Circle to settle with other banks in different markets around the world. Also, Circle would be able to store money in the Federal Reserve, as well as take loans at the extremely low inter-bank federal funds rate of 1.75%, freeing Circle from dealing with higher-cost lenders. These benefits would improve the efficiency and reduce the cost of Circle’s services.

Becoming an official bank would also simplify Circle’s regulation process. Cryptocurrency exchanges are regulated differently in each state, but if Circle would become an official federally-recognized bank, it would only have to answer to the federal government. As Circle’s chief compliance officer Robert Bench says, instead of “50 conversations”, Circle would only have to be involved in one conversation.

Additionally, Circle is trying to register itself as a brokerage and trading venue with the Securities and Exchange Commission (SEC). This would give Circle the proper licensing to facilitate trading of digital assets considered to be securities. This is crucial since Circle acquired Poloniex for USD 400 million in February 2018, where there are dozens of cryptocurrencies being traded, some of which could be considered securities. Already, many cryptocurrencies have been delisted from Poloniex following Circle’s acquisition to avoid SEC backlash.

Circle has an OTC trading service that transacts USD 2 billion of cryptocurrency every month, as well as an investing platform where users can put money into various cryptocurrencies but not withdraw the cryptocurrency. Circle also has a pay service where users can send money instantly to people in 29 countries with USD, GBP, and EUR. Deposits held with this service are FDIC ensured up to USD 250,000, like all banks in the United States.

It is only natural that a service like Circle which deals with so many financial transactions and deposits would consider becoming a bank. Only time will tell if the US government will let a firm so heavily involved with cryptocurrency to achieve this.

 

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Binance Acquires Maltese Bank Account, Plans Fiat Functionality Within a Year

Cryptocurrency exchange Binance has announced that it has successfully opened a bank account in Malta. The CEO of Binance, Zhao Chengpeng, says that fiat to cryptocurrency trading will be launched within a year on the exchange.

Binance is the top cryptocurrency exchange in the world by volume with USD 1.5 billion of trading in the last day. This edges out the second biggest exchange OKEx by USD 100 million  and third biggest exchange Huobi by USD 350 million. Of course, these numbers vary from day to day, but Binance has almost always the top cryptocurrency exchange in the world by volume recently, with 343 different cryptocurrencies traded.

Despite being the biggest cryptocurrency exchange in the world, Binance has had no fiat functionality up to this point. Soon customers will be able to deposit fiat and buy cryptocurrency, and deposit cryptocurrency and withdraw fiat. This will attract many more customers and a lot more money to the exchange, improving liquidity and increasing market activity, cementing Binance’s top spot among cryptocurrency exchanges.

Binance was founded in Hong Kong, China, but was forced to move in September 2017 due to China banning all cryptocurrency trading. Binance chose Japan for its next headquarters but its stay was brief. On 23 March 2018 Japan’s Financial Services Authority issued a warning to Binance that it must cease operations since it didn’t have a license; Binance was trying to get a license before they moved but were unsuccessful.

Immediately after the Japanese warning, Binance decided to move to Malta, which is becoming a popular haven for cryptocurrency activity. The Prime Minister of Malta, Joseph Muscat, welcomed Binance with open arms.

Welcome to #Malta 🇲🇹@binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies -JM @SilvioSchembri https://t.co/3qtAQjOpuQ

— Joseph Muscat (@JosephMuscat_JM) March 23, 2018

Zhao Chengpeng says Malta is one of the best places for blockchain firms and praises the local government’s attitude. He says things are going very well, and Binance may possibly form a partnership with Malta’s Stock Exchange.

Despite the peace of mind that Malta offers, Binance is still trying to become completely decentralized and considers that a top priority. This is not surprising considering that Binance has been chased around the world by angry governments. Becoming completely digital and decentralized is the only way to guarantee its long-term survival.

 

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Argentinian Bank Utilizes Bitcoin for International Payments

Banco Masventas, a bank based in Argentina, has launched a new service as of 22 May 2018 which will utilize Bitcoin to facilitate international money transfers. This is a major milestone for Bitcoin, since it is likely the first time it has been used by a financial institution as an international payments standard.

The bank is partnering with Bitex, a Latin America-based Bitcoin exchange, to facilitate the international payments. In an interview with Coindesk, Bitex chief marketing officer Manuel Beaudroit said that customers won’t actually be touching any Bitcoin when using this new international payment service offered by Banco Masventas. The customer simply asks the bank to send an international payment from their account, and the bank in coordination with Bitex will handle converting their fiat funds to Bitcoin and back again when it reaches its international destination.

This service offered through Bitex will allow Banco Masventas customers to significantly reduce costs associated with international transfers since there will be no international banks as intermediaries. Also, international transfers will be faster than other systems, occurring in less than 24 hours. It only takes 10 minutes for a Bitcoin transaction to confirm on average, but it will take some time to convert fiat to Bitcoin and back to fiat.

International transfers will be available to over 50 countries, and Banco Masventas will be charging a 3% commission.

Of course, Bitex’s process of converting fiat to Bitcoin and back to fiat when the money reaches its international destination is inherently centralized and possibly not entirely cryptographically secure. Customers will have to trust Banco Masventas and Bitex when using this new international transfer service.

Sending Bitcoin by itself with no other service involved actually makes more sense if control of your money and security is the priority. Of course, using purely Bitcoin is less convenient since ultimately it usually needs to be converted into fiat before it can be used to buy goods and services. Bitex streamlines the process of converting Bitcoin payments to fiat, which can be quite an arduous process if someone had to do it themselves. Also, using the service offered through Bitex removes the risk of market volatility.

It is a big deal that any bank is using Bitcoin to transfer money across international borders, and this may be the beginning of banks recognizing and utilizing Bitcoin as a trustworthy payment method in the future. Bitcoin’s ability to transfer money anywhere in the world instantly and securely is gaining recognition.

 

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