How Blockchains will save Billions in Clearing and Settlement Costs

Blockchain technology could save financial institutions $15-20 billion in clearing and settlement costs by 2022. Exciting stuff. I keep seeing these big numbers thrown around, but not a whole lot to back them up. Where did these calculations come from? How do you even measure such things when the industry definition of “blockchain” changes every other day??

The Financial Times frequently references an Oliver Wyman report that says:

Our analysis suggests that distributed ledger technology could reduce banks’ infrastructure costs attributable to cross-border payments, securities trading and regulatory compliance by between $15-20 billion per annum by 2022.

That’s the end of the analysis. Is finance one of those industries where no one is required to show their work? I suspect the $15-20 number is somehow derived from an in-house publication from 2014 that estimates total clearing and settlement costs at $65-80 billion. Somehow, blockchain technology will reduce these costs by 25-30%.

Oliver Wyman isn’t the only one who thinks so! Accenture claims that blockchains could save investment banks $16 billion in clearing and settlement, citing a website from Quartz that cites a report from Autonomous Research:


Autonomous Research created their estimates by taking a poll of 150 investors and industry participants.

So blockchains will save billions in clearing and settlement costs because a bunch of people made a jellybean guess. It’s like a prediction market, because banks are also placing bets based on their predictions. Too bad there’s no way to bet on how much money blockchains won’t save.

I think people are right about blockchains reducing clearing and settlement costs. The cost savings just won’t be realized by investment banks.

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