S&P could change the ratings of major banks if blockchain tech takes off

Standard and Poor's (S&P) may contemplate creating rating changes of major monetary establishments if the utilization blockchain technology becomes widespread and starts to impact current business models, the worldwide ratings agency aforesaid.

In a report printed Wednesday, S and P aforesaid that it believed the rising investment in blockchain technology advised that a "transformation" of the monetary business may be afoot.

Blockchain works sort of a large, localised ledger for the digital currency bitcoin, recording each dealings and storing this info on a world network therefore it can not be tampered with. It's this technology that banks feel are often employed in areas from remittances to securities exchanges so as to slash prices and build a fraud-proof record of transactions while not the necessity for third-party authorization.

S&P aforesaid the technology may contour back-office operations, shorten clearing and settlement times, expedited payments and generate new revenue streams for monetary establishments from banks to quality managers.

But do not expect widespread use of blockchain shortly.

"While blockchain technology can seemingly be used for niche applications, market-wide adoption could be a good distance off, since it'll need accord among market participants and, in some cases, regulative approval," S&P said.

"As a result, we tend to don't see blockchain as a rating driver within the close to term or {perhaps} perhaps within the long run. however we tend to contemplate that, reckoning on the technology's ultimate application and whether or not it takes hold within the monetary business, it may have a considerable impact on institutions' business models."

S&P aforesaid that it may offer corporations a competitive advantage or perhaps begin to "diminish the relevance" of sure business models. during this case, S&P aforesaid it may "consider rating changes if its widespread implementation happens quicker than we tend to presently expect, leading to an intensive impact on monetary institutions' operational models".

So far, could major banks are trialing blockchain technologies with a firm referred to as R3 operating with lenders to check out the technology's potential uses. On Monday, Wells city and also the Commonwealth Bank of Australia (CBA) incontestible one in every of the primary real-world uses of blockchain technology to method and execute a cargo of cotton from the U.S. to China.

source : www.cnbc.com