Moody’s: Blockchain Technology to Reduce Transaction Costs, Bank Commissions

Apr 17, 2018 at 17:00

Financial credit rating company, Moody’s Investors Service said that Blockchain technology may help banks with reduced cross-border banking transaction costs and processing time but will put pressure on their fees and commissions.

“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 but the adoption of these technologies will also limit processing fees, commissions and gains on foreign exchange transactions, which will pressure revenue,” Moody’s managing director, Colin Ellis expressed in a press release.

The firm warned that Swiss banks would be most exposed to such reductions in fees and commission, with 50 percent of their revenue coming from that source.

Italian, Canadian, and Israeli banks follow at around 35 percent while 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 also noted that banking systems with significant cross-border transactions especially those in the United Kingdom, Belgium and Switzerland may experience the most disruption from the technology.