Blockchain Technology in Banking

Blockchain in Banking
Who thinks blockchain is the future of banking?

VISION & MISSINZ FACTS & FIGURES

Blockchain in Banking
Challenges in the Banking Sector
Banking infrastructure still
involves paperwork and files
stored in siloed cupboards.
VISION & MISSINZ
It takes days or sometimes
more time to process a cross
border transaction.
WELCOME TO
Banking and loan frauds
FRANKFURT SCHOOL
Millions of dollars are spent in
conducting due diligence
check such as KYC each year
FACTS & FIGURES
Risk of cyber theft as our
online banking operations are
vulnerable
The high transfer fees levied
by banks to process
transactions
Blockchain in Banking
Challenges in Banking Sector

Lack of technological Strict regulatory compliance

innovation in the finance
sector
VISION & MISSINZ
Valuable information, in some
sectors, like trade finance is
still conducted over fax
laws for banks and credit
unions varying in different
jurisdictions
FACTS & FIGURES
Lack of financial inclusion in
our banking sector. Over 2
billion people in the world are
unbanked.

WELCOME TO
The functions and features of blockchain technology can facilitate banks and

FRANKFURT SCHOOL
financial institutions in solving some of these complex issues faced by our financial
ecosystem today!
Blockchain in Banking
Features of Blockchain Technology

VISION & MISSINZ Distributed Peer to FACTS

Peer: & FIGURES
Transparency and
A Digital Ledger
Removal of third Traceability
Parties

WELCOME TO
FRANKFURT SCHOOL
Fast transaction
Trustless
Immutable and Secured through
Framework
times Accountable Cryptography
Blockchain in Banking

VISION & MISSINZ FACTS & FIGURES

What are the blockchain technology

use cases in banking?
Use Cases in Banking

Payments and Remittances KYC and AML / Regulatory Reporting

Smart Contracts Clearing and Settlement

VISION & MISSINZ FACTS & FIGURES

Loan Syndication Financial Inclusion

Trade Finance Insurance

Proxy Voting Financial Records

Loan Syndication

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USE CASES IN BANKING
SYNDICATED LOANS
• A syndicated loan is a financing
offer made by a group of lenders
who work together to provide
funds for a single borrower.
• Customer is a corporation or
government.
• This process usually takes more
than 21 days to settle a trade.
• Blockchain technology offers
advantages that are particularly
tangible in processes that involve
a substantial number of parties.
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USE CASES IN BANKING
SYNDICATED LOANS
Background New process Benefits

• The process is often • The process is automated
manual. and intermediaries are
removed.
• Banks uses a different
system and struggle to • Blockchain serves as an
communicate. asset register and ledger
for both the primary and
• Settlement takes time.
secondary markets.
• Costs associated with
booking and serving • The final agreement is
recorded with a user code
these loans are very high.
and the timestamp.
• Make it safer, easier and
profitable for the
participants.
• Minimise operational
risk.
• All the participants have
access and share the
same relevant
information.

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USE CASES IN BANKING

SYNDICATED LOAN

• €150m deal, granted by BBVA, BNP Paribas and MUFG, was reached
in record speed using BBVA’s proprietary platform.

• The whole facility’s negotiation process was closed over the

blockchain network, which allowed a significant expedition of the
process while ensuring full documentation tracking and negotiation
transparency.

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USE CASES IN BANKING
SYNDICATED LOANS

• LBBW and Daimler have tested a bonded loan transaction based on the blockchain
• EUR 100m bonded loan was negotiated and closed via blockchain technology with multiple
banks involved

• The entire transaction from the

 Origination
 Distribution
 Allocation
 Execution
 Confirmation of repayment and of interest payments was digitally carried out via
blockchain technology.

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Blockchain in Banking
CHALLENGES AND LIMITATIONS
Challenges & limitations of blockchain
Limited scalability
• A fully distributed blockchain is
limited in the number of transactions
it can handle at a time
Interoperability
• Standardization could help enterprises
collaborate on application development,
validate proofs of concept, and share
blockchain solutions as well as making it
easier to integrate with existing systems.
Regulations & Governance
• There is a strong argument for blockchain
applications to work within existing
regulatory structures not outside of them,
but this means that regulators in all industries
have to understand the technology and its
impact on the businesses and consumers in
their sector.
Security & Privacy
• While cryptocurrencies like Bitcoin offer
pseudonymity, many potential applications of
the blockchain require smart transactions and
contracts to be indisputably linked to known
identities, and thus raise important questions
about privacy and the security of the data
stored.
Thank you