Santander InnoVentures, Banco Santander’s corporate venture arm, published a report “The Fintech 2.0 Paper: rebooting financial services” which highlights benefits and opportunities that arise with the latest financial technology. The report is prepared together with Oliver Wyman and the Anthemis Group.
The report focuses on “fintech 2.0”, which is described as a process which will “deliver fundamental changes to the infrastructure and processes at the core of the financial services industry,” by applying innovations such as the Internet of Things (IoT), smart data or distributed ledgers.
The report highlights four key areas where IoT can be applied in the most efficient manner: product design, risk management and pricing, understanding customer needs, and streamlining contractual processes. For the banking industry, reducing costs can prove to be the biggest advantage of IoT, especially when applied together with distributed ledger (DLT) and smart contracts.
“It is only a matter of time before distributed ledgers become a trusted alternative for managing large volumes of transactions,” the report notes.
“International payments remain slow and expensive and significant savings can be made by banks and end-users bypassing existing international payment networks”.
One of the key takeaway messages from this report is that, according to their analysis, banks can reduce costs associated with “cross-border payments, securities trading, and regulatory compliance by between $15-20 billion per annum by 2022”.
Moreover, poor efficiency in the global collateral management market is also estimated to cost banks up to $4 billion annually. Blockchain technology can significantly improve this aspect by monitoring the condition, environment and location of collateral assets.
In recent years, we have seen numerous blockchain-powered projects aiming to transform the mortgage industry. Santander’s report highlights over-reliance on a number of intermediaries to manage a mortgage-issuance process, and how the use of the latest financial technology can make the entire process faster and more efficient.
In February, Newconomy reported that Banco Santander signed a $700 million agreement with IBM to use its Watson program. The contract will enable Santander to accelerate and deepen its business transformation and realize annual savings on IT spent.