Retail banking sector has been slow to adopt blockchain technology, Bloomberg reported, citing a research by management consultancy firm McKinsey & Co.
Compared to other investment banking counterparts, retail banks face greater challenges in gaining the technology’s potential benefits, the report noted.
The challenges for the retail lenders include strict regulatory environment for consumer finance as well as the success of alternative payment services.
The report quoted Matt Higginson, one of the authors of the study, that the weak reputation of cryptocurrencies such as Bitcoin, for which blockchain is the underlying technology, has made the retail banking sector nervous and cautious.
McKinsey estimates that cross-border payments, with the adoption of blockchain, could save about $4 billion in a year. It would also reduce regulatory fines by $2 billion to $3 billion. The use of Blockchain solutions are also expected to reduce annual losses from fraud by $7 billion to $9 billion.
Despite the concerns, some retail banks are getting into the blockchain technology, including Santander, which joined with Ripple in 2018 to launch the first blockchain-based money-transfer service, the report noted.
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