Switzerland’s banking system could benefit perhaps the most of any other country’s from Blockchain when it comes to reducing cross-border payments processing times.
This is among the findings of ratings agency Moody’s Investors Service. It sees Blockchain technologies as helping banks throughout the world enhance efficiency, improve cost savings, and reduce risks.
Moody’s noted that the implementation of Blockchain, which is still in its early days, will ultimately be disruptive, “creating both winners and losers within and across financial systems.”
All this is noted in a report Moody’s released Monday called “Blockchain Efficiencies Could Streamline Transactions but Reduce Banks’ Fee Income.”
Let’s go over some of the findings.
Blockchain’s many banking pluses
In the report, Moody’s concentrated on two areas: cross-border transactions, and fee and commission income. The goal of the report was to get a sense of where Blockchain could be most disruptive.
Given the relatively larger volumes of banking transactions in certain countries, Blockchain could be particularly helpful in reducing the costs and time involved in cross-border transactions.
This is especially the case for Switzerland.
Moody’s findings covered specifically:
- Banking systems with significant cross-border transactions as seeing the most disruption.
- Blockchain having the potential to significantly reduce the costs and time involved in cross-border transactions
- Blockchain exerting downward pressure on fees and commissions.
Banking systems in focus
Moody’s found that banking systems in Luxembourg and Hong Kong, followed by United Kingdom, Belgium and Switzerland, have relatively larger volumes of cross-border transactions as a percentage of GDP.
As a result, these countries could be most affected from any streamlining of cross-border transactions through Blockchain, according to Moody’s. In the report, it is stated:
Relative to GDP, the greatest cross-border claims between banks are presently found in Luxembourg and Hong Kong at 560% and 270%, respectively. Switzerland, the United Kingdom and Belgium were found to be clear outliers.
In aggregate, Swiss banks may be most at risk of disruption, given that 50% of their revenue stems from fees and commissions, according to the report.
Meanwhile, banks in Asia Pacific, as well as some smaller European periphery countries, are relatively less prone to relying on fees and commissions in generating total revenue, Moody’s found.:
Nonetheless, essentially all these systems are above 10% which still represents a non-trivial share of revenues that could come under pressure.
A main conclusion drawn by Moody’s is that Blockchain could allow transactions to be done without central intermediaries.
The transactions could flow directly through the Blockchain network with an optimized foreign exchange process settled at the lowest rate within the system and at reduced operational costs.
All this would be due to the simplified, streamlined transaction process.
This article appeared first on Cryptovest
