
Blockchain could save investment banks up to $12B a year: Accenture - artsandsci
http://www.reuters.com/article/us-banks-blockchain-accenture-idUSKBN1511OU
======
spangry
Oh god, not this again. Sounds like Accenture are looking to bring in more
'technical integration' clients (read: marks). Government and old financial
being the favourites, given their deep pockets and technical illiteracy.

If anyone is in a job that involves holding back some of this insanity, this
decision-flow diagram might help:
[http://i.imgur.com/4nZ67Sq.png](http://i.imgur.com/4nZ67Sq.png)

~~~
sly010
There is a mistake on the diagram. The rightmost ellipse should say "you don't
need a blockchain". The rest is accurate.

~~~
TeMPOraL
I'd say "you could use a blockchain". It does have _some_ uses.

------
josu
For context, Accenture has been criticizing blockchains for their
immutability. [1] [2] [3] So I would not take anything coming from them
seriously.

[1] Downside of Bitcoin: A Ledger That Can’t Be Corrected:
[http://www.nytimes.com/2016/09/10/business/dealbook/downside...](http://www.nytimes.com/2016/09/10/business/dealbook/downside-
of-virtual-currencies-a-ledger-that-cant-be-corrected.html?_r=0)

[2] EDITING THE UNEDITABLE BLOCKCHAIN (PDF)
[https://www.accenture.com/t20160927T033514__w__/us-
en/_acnme...](https://www.accenture.com/t20160927T033514__w__/us-
en/_acnmedia/PDF-33/Accenture-Editing-Uneditable-Blockchain.pdf)

[3] Accenture Launches A Way To Edit Blockchains:
[http://www.forbes.com/sites/tomgroenfeldt/2016/10/06/accentu...](http://www.forbes.com/sites/tomgroenfeldt/2016/10/06/accenture-
launches-a-way-to-edit-blockchains/#4f27c765373b)

~~~
petertodd
What I found especially amazing by that is traditional accounting is based on
immutability already: you never delete a ledger entry, you add a correction.
The same concept for a blockchain is trivial. Equally, if you _really_ do need
to delete something, just insert a record into the blockchain instructing all
nodes to delete that record. Sure, you won't be able to verify the chain 100%
after you delete the data, but you'll have a auditable record of why that's
the case.

~~~
unknownsavage
Actually their view point is perfectly consistent. They criticized _bitcoin_
not the blockchain. While a blockchain could support some of the regulatory
required undo stuff (by appending a record that it's been undone), bitcoin
itself certainly doesn't won't let you roll back a bunch of transactions.

~~~
petertodd
Read the PDF: they're working on a chameleon hash scheme so that their
blockchain can be undetectably modified, not unlike making an accounting
ledger with dry erase markers. That's going way beyond disagreeing with
Bitcoin; what they're doing doesn't have the strong auditability that you'd
expect from a "blockchain" solution. It's closer to a bog standard database
really.

------
patio11
Blockchain here refers not to the distributed database technology loosely
coupled with Bitcoin but rather "assert the existence of a database;
simultaneous adoption of it across all parties that matter in the financial
industry sure would be swell now wouldn't it."

Which is true. Databases are pretty useful things. It's a shame banks never
thought of adopting one before.

~~~
arjunnarayan
"Another aspect of blockchain, as I often emphasize, is sociological:
Blockchains are cool. If you announce that you are updating the database
software used by a consortium of banks to track derivatives trades, the New
York Times will not write an article about it. If you say that you are
blockchaining the blockchain software used by a blockchain of blockchains to
blockchain blockchain blockchains, the New York Times will blockchain a
blockchain about it."

[https://www.bloomberg.com/view/articles/2017-01-10/bank-
bloc...](https://www.bloomberg.com/view/articles/2017-01-10/bank-blockchains-
and-an-alibaba-box)

~~~
patio11
It's basically impossible for me to have any insight on the financial markets
which has not already been said, better, by Matt Levine.

~~~
eternalban
He omitted to mention dark pools & how blockchains can help there.

[https://en.wikipedia.org/wiki/Dark_liquidity](https://en.wikipedia.org/wiki/Dark_liquidity)

[p.s.] The "social" angle was the most ridiculous thing I've ever [read].
Yeah, let's pour in tons of money to build a tech so it gets printed in the
New York Times. Is this guy for real?

------
mholmes680
"Their estimates did not include potential costs and investments required to
deploy the technology."

well, of course not... because then there would be no dramatic teaser
headline. Accenture money grab here - presumably they've positioned themselves
accordingly already?

~~~
saemil
I agree with your sentiment. I do not see a scenario where financial
institutions would agree to put their transactions into a distributed ledger
with copies of the data (even encrypted) held by their competitors. If the
financial institutions limit the ledger to computers within their control,
what would be the benefit over a clustered database environment (I am assuming
that most large financial institutions already have these).

~~~
cashmonkey85
The problem is without blockchain you don't have a meaningless buzzword to
sell bullsh*t to banks. Blockchain is a vital technology for this.

Cryptocurrency is the future but I've never talked to more snake oil sales
people than when talking to "blockchain" companies. I marvel at people's
ability to sell nothingness

~~~
ng12
I worked in a consulting-type company for a bit and the most valuable lesson
was that, generally speaking, nobody knows anything about anything. The most
valuable institutions in the world have completely clueless people managing
their tech and the ignorance only gets worse as you go up the chain.

It all boils down to "nobody got fired for buying IBM". Your blockchain
initiative is only to get you noticed enough to get promoted or hired to a
better position somewhere else. By the time anybody realizes how worthless it
was you're long gone.

~~~
cmollis
"nobody knows anything about anything". Actually, somebody knows, but they
work for someone else.

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otoburb
Accenture is trying to augment their Financial Services[1] practice arm with
blockchain capabilities and expertise.

[1] [https://www.accenture.com/us-en/service-blockchain-
financial...](https://www.accenture.com/us-en/service-blockchain-financial-
services)

------
tomblomfield
Simply using software effectively could save banks billions a year.

Not paying money to Accenture could also save billions.

~~~
snarf21
Exactly. Note how the headline says _up to_ $12B. Not paying Accenture to
implement and then not use blockchain could save _up to_ $50B every year!

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harry8
Banning all future contracts to accenture could save the banking industry
vastly more than that. Or am I being unfair and unkind?

------
runeks
Can anyone name a single success story about the use of blockchain technology
to solve a specific problem, and how this problem was solved using blockchain
technology (besides Bitcoin)?

~~~
alcio
git

~~~
rspeer
Git is fundamentally different from a blockchain. In git, you trust the
upstream repo to maintain the integrity of the data.

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geodel
I am not clear if the money saved is after paying off Accenture consultants or
before. If it is after it is too good to be true.

------
aarontyree
Headline - 4.22.23 - The world banking market continues to struggle this
spring. While blockchain financial services looked promising at the beginning
of the decade, funneling as much as $12B per year from the human powered
Financial Services sector, many viewed this as contributing to continuing
wealth inequality. The "Decentralize and Replace" movement continues to grow.
Many smaller banks have already folded, while larger banking institutions
lobby for stronger regulations against decentralized blockchain technology...

------
parados
Accenture's approach to open-source ideas is mostly via a glossy brochure
[pdf] [1].

[1] [https://www.accenture.com/t20150523T115642__w__/us-
en/_acnme...](https://www.accenture.com/t20150523T115642__w__/us-
en/_acnmedia/Accenture/Conversion-
Assets/DotCom/Documents/Global/PDF/Technology_9/Accenture-Open-Source-
Brochure.pdf)

------
bdamm
They talk about "reconciliation". Is this the practice of moving actual money
following a bank-to-bank transfer of money? Or is this strictly an auditing
function? Any bankers want to comment on this?

~~~
scrumper
Reconciliation is the frequently manual process of making sure your records
match mine, and vice versa. It's burdensome in finance because of the
proliferation of systems used at various stages of a trade, and the number of
parties involved as well.

Edit to expand on that a bit: it means making sure that every party involved
in a trade has identical information. For a straightforward trade like an
equity done on an exchange, it's more of an exception process. For more
complex transactions where there are more data fields, it can be a very heavy
process. Rough estimates put cost of reconciliation at tens of billions per
year for banks, all of which has to be paid for somehow.

------
gluczywo
This is so terrible use case for blockchain. In a trusted environment
blockchain might only introduce complexity and security problems. Hey, but
isn't it what consulting is about?

------
dogismycopilot
I worked for Accenture for a very short time, and I will say that they have no
idea what they are talking about, regardless of what it is.

Somehow, I just found a charge for $3500 from Accenture on my credit report.
It HAS to be from when I worked there. They either took back a bonus or
thought that they paid me too much I guess. It's been years, I have never
heard anything about it, and now my credit took a hit. Worst job/company ever
would be an understatement. I quit in record time (<60 days).

~~~
100213010
Judging by the downvoting, it appears that you have hurt some delicate souls
here.

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omouse
propping up the existing banking system isn't the point of blockchain; sure it
could save money but it could generate more revenue than 12billion a year if
used for a new banking system.

the monopoly on credit has to end.

~~~
elastic_church
its going to be fun when the banks and governments are issuing credit on
blockchain assets, it is going to be a MESS when they go insolvent after the
heist of their collateral.

2028? 2035? what year you guys think that'll happen

------
jamisteven
Keywords: "up to"

------
brilliantcode
What every blockchain pumper imagines:

Bank: We don't need another database

Accenture: Did I mention it's powered by blockchain

Bank: Shut up and take my money.

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wildchild
Postgresql too.

~~~
ecesena
I understand this was prob a sort of joke, but I'd be interested in a data
point on how much a free db could help save. Is $12B reasonable, would it be
much lower/higher?

~~~
Alex3917
> I'd be interested in a data point on how much a free db could help save

Database companies price their products by how much they think they can
extract from your business. That's why they're mostly priced at free or some
nominal cost for the first few years, and then several million dollars per
year afterwards.

------
edblarney
Should read: 'Accenture finds a way to bill for another $12B a year in
consulting services' :)

------
godzillabrennus
Blockchain is so badly needed in the startup world when allocating shares of a
company. Eshares is promising but too pricey for bootstrapping entrepreneurs.

An open standard with distributed tracking of shares allocated for any given
company would help institute much more trust into startup investing. Right now
it's kind of tough to do due dilligence on a small private company.

~~~
amluto
> Blockchain is so badly needed in the startup world when allocating shares of
> a company. Eshares is promising but too pricey for bootstrapping
> entrepreneurs.

What, exactly, does a blockchain have to do with this? ISTM all that's needed
is a spreadsheet with an audit log, and even the audit log is somewhat
optional.

~~~
riprowan
In theory, an open blockchain like Bitcoin eliminates the need for a trusted
authority to be the system of record. A spreadsheet needs someone to manage
it. That person, and that data, must be very trustworthy, else they can simply
change the data for their benefit. The compliance procedures that assure
trustworthiness cost money. Lots of money. And they still fail.

Blockchains, in theory, could also serve as a voting mechanism on splits,
which could be manifested as blockchain hardforks. As Satoshi Nakamoto wrote:

> The proof-of-work also solves the problem of determining representation in
> majority decision making. If the majority were based on one-IP-address-one-
> vote, it could be subverted by anyone able to allocate many IPs. Proof-of-
> work is essentially one-CPU-one-vote. The majority decision is represented
> by the longest chain, which has the greatest proof-of-work effort invested
> in it.

Essentially a blockchain can codify the ownership of a stock share into a
smart contract.

That's the theory, and only insofar as it applies to a Proof of Work
blockchain like Bitcoin.

A private blockchain is more likely to be a Proof of Stake blockchain, in
which shares (or tokens of other sorts) are issued in a "premine" which
creates all of the tokens that will ever exist. These are then distributed to
the initial group of trusted members of the private blockchain. From there,
the blockchain can eliminate the need for a trusted authority to serve as the
system of record of ownership.

~~~
cmollis
Complete noob (in both FinTech and Blockchain), but in my limited experience
in FinTech, if you could eliminate the need for the trusted nth party (Bank Of
New York, for example, cleared all of the bond trades we made), then you could
save a few 1/32's of a trade (my last client in FinTech was like 15 years ago
so I don't even know if those fees are even valid anymore). In any case, as
you indicate, this seems to be the canonical use-case for the block chain...

