In its recent report, Deloitte's Center for Financial Services predicts total transformation of banking within ten years. Blockchain is expected to revolutionise the payments ecosystem, but there is a catch.
Global business consulting and audit services provider in the report “Banking Industry Outlook: Banking reimagined" stated that today banking sphere is facing an existential threat from new technologies – already existing ones as well as those that are likely to appear in the future. The aim of the report was to conceive the future of banking and capital markets, to predict changes that will be brought about by new technologies and propose some measures that banks can introduce now to prepare for disruptive scenarios.
The report sees the danger for banking sector coming from various areas – artificial intelligence and machine learning, blockchain technology, collaborative ecosystems, cryptocurrencies, demographics, and customer experience.
As far as blockchain is concerned, the author believes that it will play the most disruptive role in payments infrastructure transformation, not limited to retail payments but also used in trade finance, cross-border payments, and payment reconciliation. According to the author, the distributed ledger technology is likely to be widely applied in payments over the next five years. The report predicts that the active adoption of blockchain will start with corporate payments, and banks will not be able to compete, given their structural complexity and high-entry barriers.
However, the author insists that blockchain-dominant payment system will be possible only if all blockchains will meet the requirements of interoperability and compliance with global regulatory frameworks.
In the light of such predictions, the report recommends banks to invest strategically in innovative technologies and work proactively with regulators. To prevent loss of customers, banks should consider tailored solutions via careful analysis of customer data and introduce new multipayment options in order to retain their positions of trusted intermediary for their clients.
In December 2015, Deloitte’s UK subsidiary Deloitte LLP also published a report on blockchain: “Beyond bitcoin. Blockchain is coming to disrupt your industry.” In the report, the authors identified blockchain’s key characteristics that increase the possibility for innovation in every major industry: reliability and availability, transparency, immutability and irrevocability and its digital nature.