The impact of Blockchain on the transaction banking business model

Abstract

This paper analyses the impact of distributed ledger technology (DLT) on various areas of transaction banking (TxB), identifies the most promising use cases and discusses the impact on banks’ business models. By means of both a theoretical analysis as well as expert interviews using a variation of the Delphi approach, a number of potential use cases and their relative importance are evaluated. The most promising use cases identified were the utilisation of DLT for internal systems among disparate entities, securities settlement, cross-border payments, remittances, trade and supply chain finance and regulatory compliance. The impact on banks’ business models depends on the role that banks play in the ecosystem. If banks build or control their own private ledgers, DLT-based applications can significantly increase efficiency and reduce transaction cost and times for banks and, therefore indirectly, their customers. If other players build up exclusive private ledgers without banks, banks face a significant threat of disintermediation and high business model impact. Finally, while not likely in the near future, the possibility exists that overarching public ledgers with various participants will emerge. These would not necessarily disintermediate banks but rather provide a significant opportunity for new business models, forcing banks to adjust to these changes.