The white paper from Bain: Distributed Ledgers in Payments: Beyond the Bitcoin Hype, is an excellent primer for the trend.
Retail banks stand to lose their privileged position with customers and face much greater competition for fund-ing and for lending products. Ultimately, the credit card and automated clearing house industries risk annihilation.
Blockchain Cloud Identity
Bain provides a quick but insightful overview of how the Blockchain works, and then explores the massive ramifications it will bring for the banking and payments sector, in particular:
- Highlighting the shift from a system where trust is achieved centrally through top down controls, to one of a peer to peer approach where trust comes from the process itself, meaning of course an entire disintermediation of the role of banks themselves.
- Two main phases of innovation and disruption: 1) Piecemeal developments targeting certain payment scenarios, and then 2) a wholesale disruption of the industry.
- They estimate about $300 trillion of transactions are executed, generating $150-200 billion in revennues for banks.