THE IMPACT OF BLOCKCHAIN ADOPTION ON THE OPERATIONAL AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS
Abstract
Blockchain technology has emerged as one of the most significant innovations in financial services. It promises to transform banking operations by providing better transparency, faster transaction processing, lower reconciliation costs and improved record integrity. Commercial banks have increasingly been interested in blockchain-based applications, as they are under increasing pressure to modernise their legacy systems, reduce operational inefficiencies, and remain competitive in digitally evolving financial markets. These include, among others, cross-border payments, trade finance, digital identity verification, compliance systems and settlement infrastructure. Despite the strong claims on the transformative potential of blockchain, the actual relationship between the adoption of blockchain and bank performance remains uncertain. Moreover, much of the existing literature is conceptual, optimistic, or technology-centered. Relatively fewer studies critically evaluate whether blockchain creates measurable operational and financial benefits for commercial banks.
The present thesis examines the effect of blockchain adoption on the operational and financial performance of commercial banks. The thesis argues that although blockchain could improve some aspects of banking performance, particularly in the areas of verification, reconciliation, record management and transaction settlement, the benefits are neither universal nor guaranteed. Their implementation is dependent on the quality of implementation, the readiness of the organisation, the regulatory support, the interoperability with legacy systems and the strategic objectives of the institution adopting them. The thesis takes a critical position and questions whether the adoption of technology necessarily implies better performance at a bank and challenges deterministic assumptions. This paper conceptualises blockchain adoption as a sociotechnical process that depends on institutional, economic, and regulatory conditions. The study is expected to add to the literature by linking innovation adoption more directly to measurable banking outcomes.
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