What are the potential benefits of smart contracts for financial institutions and their customers?
There are inherent benefits to smart contracts, as specific use cases highlighta:
Investment banking: In trading and settlement of syndicated loans, corporate clients could benefit from shorter settlement cycles. Rather than the current 20 days or more, smart contracts could bring this down to 6 to 10 days. This could lead to an additional 5% to 6% growth in demand in the future, leading to additional income of between US$2 billion and $7 billion annually. Investment banks in the US and Europe would also see lower operational costs.
Retail banking: The mortgage loan industry will benefit significantly by adopting smart contracts. Consumers could potentially expect savings of US$480 to US$960 per loan and banks would be able to cut costs in the range of US$3 billion to $11 billion annually by lowering processing costs in the origination process in the US and European markets.
Insurance: Usage of smart contracts in the personal motor insurance industry alone could result in US$21 billion annual cost savings globally through automation and reduced processing overheads in claims handling. Consumers could also expect lower premiums as insurers potentially pass on a portion of their annual savings to them
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