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Blockchain's Appeal Is Limited for Retail Banks, McKinsey Says

  • Remittances, anti-fraud and risk management may be best uses
  • Bank cooperation, creating digital identites are big hurdles

Retail banks have been slower to embrace blockchain technology and face greater challenges in reaping its potential benefits than their more adventurous counterparts in the investment-banking world, according to new research from McKinsey & Co.

Headwinds for retail lenders to adopt a shared system of distributed computer ledgers to manage day-to-day activities include a tougher regulatory environment for consumer finance and the success of existing alternative payment services such as Zelle, Matt Higginson, one of the authors of the report, said in an interview. The poor reputation of cryptocurrencies such as Bitcoin, which use blockchains to track and validate transactions, has also made the “retail banking sector nervous and cautious,” he said.