From 37 days to 30 seconds: How blockchain will transform banking industry
2 February 2018
It takes on average over two and a half weeks to set up a new account with the “big five” banks, research from business app Tide has found. The study also looked at how long, on average, it takes an SME to book a meeting with a bank advisor in cities across the UK.
George Bevis, founder of Tide – an app that enables SMEs to conduct their banking entirely via smartphone – says: “The assumption is that customers enjoy physical presence, but what they really want is easy access to services and accounts.”
Blockchain will help eliminate the lengthy process it takes to identify and verify new customers who want to open bank accounts, according to Barclays.
Jeremy Wilson, vice-chairman of Barclays Corporate Banking, says: “If you walk into a branch to open a bank account, in a blockchain-enabled environment, within 30 seconds we could have checked your identity against sanctions lists, law enforcement agencies and financial records.
“Through the combination of a range of technology unified through the blockchain we would be able to confidently state that ‘yes, this person is who they say they are, and they are eligible for an account’. A process that might otherwise take days takes seconds.”
Blockchain does this through being able to provide the bank with a clear audit trail of the person’s financial footprint and where every different transaction has comes from. Speaking earlier this year at The Economist Finance Disrupted Conference, Wilson said it is estimated that “know your customer” (KYC) policies and compliance costs the banking industry around 10 per cent of its operating costs.
He added: “If that is the case then it is entirely logical that we should start moving down the road where we can establish the identity of the people we are dealing with and understand they are not crooked. Blockchain appears to offer that.”
According to Wilson, blockchain can also help in areas like trade finance. Currently it can take a long time to send trade financial transactions around the world due to lengthy authorisation processes. If blockchain is used it can speed up the process and reduce the time taken to do transactions around the world significantly.
In the capital markets, said Wilson, “it is becoming increasingly clear that blockchain offers you the opportunity to be completely clear a security or share that belongs to you and is a true share of X, Y and Z. The processes we have in place are quite cumbersome and expensive, and blockchain is able to solve that as well as accelerate the process.”
This article was published in our Business Reporter Online: Future of Banking & Fintech.