Moody’s, which is an international credit evaluator, warned that blockchain technology can impact banks’ profits from commissions.
It chose Switzerland, which is highly dependent on profits from commissions, as the country that will be affected negatively the most due to blockchain technology. On the other hand, it chose India, which receives large amount of foreign exchange, as the country that will benefit the most from blockchain technology.
American economic media called CNBC reported on the 17th that although blockchain technology that accelerates trades between borders and lowers costs of trades, it can reduce amount of profits based on bank commissions.
According to a report from Moody’s, Moody’s explained that blockchain technology can have negative impact on large financial institutions in Switzerland as half of their profits come from commissions and expenses. It analyzed that Switzerland, which has established an environment that is friendly to cryptocurrency business such as Bitcoin, is actually exposed greatly to potential risks from blockchain technology.
After Switzerland, Moody’s chose Italy, Canada, and Israel as countries that will be negatively affected by blockchain technology. Amount of profits from commissions for banks from these countries is responsible for 35% of their incomes. South Korea is considered as a country that has low income from commissions from currency trades.
Moody’s also added that Luxemburg and Hong Kong are countries that are also exposed to possible risks from blockchain technology as they process many trades between borders.
Moody’s explained that blockchain can change financial services and that banks can improve their efficiency and reduce costs and risks. Blockchain technology helps people that are directly involved to quickly form safe and permanent records on trades without any third parties. Many banks are currently using blockchain technology and they are looking for ways to reduce amount of time it takes to process trades between borders from days to mere seconds. Switzerland is the most active country that is looking for such ways.
On the other hand, Moody’s chose India as the country that will benefit the most from blockchain technology as it receives large amount of foreign exchange. According to Indian press, it is estimated that about 200 million immigrant workers are supporting about 800 million family members. India received $62.7 billion of foreign exchange in 2017. Banks in India can save about $80 million annually by using blockchain. It is expected that blockchain can be a great help for Indian banks that are relatively poor.
Actually, RBI (Reserve Bank of India) recognizes advantages of blockchain and is encouraging even more investments and research. SBI (State Bank India), which is a national bank in India, made an announcement last February that it will use blockchain technology for accounting, wire transfer, and trades.
Staff Reporter Kim, Myunghee | noprint@etnews.com