In a report issued Tuesday, Moody’s Investors Service warned that Blockchain technology could someday take a bite out of the fees and commissions charged by Canada’s big banks.
The international rating agency’s report looked at two specific areas that could be affected by Blockchain: cross-border transactions and fee income. Moody’s found that the distributed ledger technology has the potential to cut down on the time and money connected to cross-border banking transactions, but that it also raises risks for some bank revenue streams.
And while Canada’s big banks have other sources of fees and commissions, Moody’s said that type of income as a percentage of revenue for banking systems “can offer a guide to which systems may be most affected by the adoption of Blockchain technology.”
Based on Moody’s calculations, Swiss banks would be most exposed to a Blockchain-related disruption, as 50% of their revenues flow from fees and commissions. But the next most exposed would be Canadian, Israeli and Italian banks, the report claims, as lenders from those countries derive around 35% of their revenue from those sources.
Moody’s said Blockchain is still at an “early stage,” but the report comes as some Canadian banks are experimenting with ways to use the technology in their businesses. Outside of cross-border transactions, other areas where Blockchain could affect bank operations include anti-money laundering processes and trade finance, according to the ratings agency.
