Blockchain, the technology behind bitcoin, could fundamentally alter the way banks do business worldwide, lowering their operating costs and making financial services securer and more accessible, according to a new World Economic Forum (WEF) report.

However, the effects will be hidden, coming from new processes and architecture based on blockchain rather than radical fintech innovation or new currencies such as bitcoin, the report says.

The report, titled ‘The future of financial infrastructure’, focused on nine individual uses of blockchain across six separate activities in financial services – insurance, payments, market provisioning, investment management, capital raising, and depositing and lending – to build a picture of how processes in each could be transformed by the technology.

The report found that some of the processes would be replaced by blockchain include bread-and-butter activities of financial institutions, such as: international payments and wire transfers; Rehypothecation, or the repackaging of mortgages; and compliance reporting of banks to regulators.

With blockchain promising to simplify back-end banking processes, making them cheaper, securer and more accessible, one area where it could have a profound impact is in creating an inter-bank, blockchain-based fiat currency to streamline the arduous process for transferring money, the report noted.

WEF head of financial services industries Giancarlo Bruno said: “Rather than stay at the margins of the finance industry, blockchain will become the beating heart of it. It will help build innovative solutions across the industry, becoming ever more integrated into the structure of financial services, as mainframes, messaging services and electronic trading did before it.”

The report added that blockchain could allow consumers to pay less for all kinds of financial activity, from international payments to the trading of stocks and bonds. It could also give regulators new capabilities, allowing them to stop regulatory violations before they start and to watch more effectively for warning signs of financial crises.

However, Bob Contri, Global Financial Services Industry leader, Deloitte Global, and a co-sponsor of the report, said competing financial institutions will need to come together to achieve these results.

“Before full adoption is possible, there are factors that need to be addressed, including an uncertain regulatory environment, lack of standardization efforts and the need for a formal legal framework,” he said.