Cross-border banking transaction made cost effective using blockchain: Moody’s
Cross-border banking transaction involves cost as well as time. By introducing blockchain technology or distributed ledger system has the potential to tremendously reduce the time and cost in the cross-border banking transaction. This will significantly increase banking efficiency. But the only drawback is the pressure the bank must face on its fees and commissions. Moody's Investors Service said in a report in London on Tuesday.
Two issues were mainly focused on Moody's report namely the disturbance that can be caused due to cross-border transactions and fee and the commission income. These are the main areas that can cause the impact on banking operations.
Even though that scenario still is prevalent, the report said that cross-border transactions would occur at a faster rate with low cost, this would be credit positive for banks, these efficiencies could also compress their fees and commissions, a credit negative.
Colin Ellis, Moody's Managing Director -- Credit Strategy and the report's co-author. Said, "Blockchain has the potential to substantially change how a wide range of financial services are executed. Banks could benefit significantly from the development and implementation of blockchain technologies in terms of enhanced efficiency, cost savings, and risk reduction,"
The report said that banking systems with remarkable cross-border transactions from countries like the United Kingdom, Belgium and Switzerland may suffer from most disturbance from the technology which holds and supports virtual digital currencies such as Bitcoin, Ethereum, etc.