user51386: After learning a bit about Bitcoin and Blockchain Technology, I do not understand how any bank is going to use it.
My understanding is that the blockchain is useful in an environment of mistrust. In a closed system, like a bank, different nodes would be wasting computation if they used a blockchain with Proof-of-Work. If they just use the hash of previous blocks to verify the blockchain is never tempered with, without Proof-of-Work, can't any normal database do it much more time efficiently in a closed system (where all nodes belong to bank)?
What are the essential requirements for a problem to justify using the blockchain with and without Proof-of-Work?

user52380: For the bank that I was a part of (Deutsche Bank) the value was in creating a blockchain based bond / securitizied debt product system using smart contracts (more ethereum than bitcoin) particularly because the bond markets are so expensive to be a participant of. The majority of bonds are traded OTC and not through an exchange so there is no way of tracking ownership in secondary markets except through custodians' antiquated main frame systems (built on cobol etc.) The problem being, when a major issuer adjusts a certain bonds coupon rate, it affects the payments and thus the total sale price of the bond through it's entire holder history. 
And that's why the banks need an army of accountants to make sure that all of their customers correctly received the coupon distribution, adjustment, etc. from the issuer. 
In a blockchain based system, the entire network would have visibility (and ideally maintain some level of anonymity because finance and identity breaches are a massive issue) from the issuer to the current holder and the contract would pay out automatically to that holder without having to travel through all the intermediaries.
Nothing is available externally at this point of course because banks love using open source technology without contributions. That may or may not change in the future. 
If you are a blockchain developer, this would be the market to enter. Independent of the outcome of bitcoin itself, the blockchain as a financial system will have plenty of room for development of contract and token systems for years. Just look up all the incubators and companies in Switzerland that have launched in the last 2 years. Also, check out the history of Blythe Masters. Trust me, the finance sector knows how to capitalize on opportunities. 
Link 

user44772: Provenance is very important with OTC transactions. Many banks are comprised of thousands of tiny holding companies. How do you verify ownership? A decentralized Blockchain. Using a Blockchain, you can establish the chain of custody originating from the mining/genesis/issuance of the security.
Also trust (counterparty risk) is very important in OTC transactions. Lehman Brothers failure was directly tied to other banks not believing their solvency. With a decentralized Blockchain, if Lehman Brothers was 100% solvent, they could have signed a message using the private key associated to public addresses where hundreds of billions of securities were tied to.
There was a case where a foreclosed homeowner sued because they claim not to have borrowed money from "MERS" as reported on public deed information. The case had some level of merit since there was proof that MERS had the right to issue a foreclosure. A blockchain assigning these rights to MERS by the originating bank would have resolved such subjective issues in court.

user48884: Blockchains are best used when there are multiple entities that don't necessarily trust each other. So within one bank, a blockchain really isn't useful. However between bank transfers could use the blockchain. Right now, in order to send between banks, banks use centralized systems (ACH, SWIFT, etc) operated by a third party. With federated blockchains, they can remove most of that third party's involvement and thus save on fees and time. That's really the only good use case for banks using blockchains that I have heard of.

51386: <p>After learning a bit about Bitcoin and Blockchain Technology, I do not understand how any bank is going to use it.</p>

<p>My understanding is that the blockchain is useful in an environment of mistrust. In a closed system, like a bank, different nodes would be wasting computation if they used a blockchain with Proof-of-Work. If they just use the hash of previous blocks to verify the blockchain is never tempered with, without Proof-of-Work, can't any normal database do it much more time efficiently in a closed system (where all nodes belong to bank)?</p>

<p>What are the essential requirements for a problem to justify using the blockchain with and without Proof-of-Work?</p>
 52380: <p>For the bank that I was a part of (Deutsche Bank) the value was in creating a blockchain based bond / securitizied debt product system using smart contracts (more ethereum than bitcoin) particularly because the bond markets are so expensive to be a participant of. The majority of bonds are traded OTC and not through an exchange so there is no way of tracking ownership in secondary markets except through custodians' antiquated main frame systems (built on cobol etc.) The problem being, when a major issuer adjusts a certain bonds coupon rate, it affects the payments and thus the total sale price of the bond through it's entire holder history. </p>

<p>And that's why the banks need an army of accountants to make sure that all of their customers correctly received the coupon distribution, adjustment, etc. from the issuer. </p>

<p>In a blockchain based system, the entire network would have visibility (and ideally maintain some level of anonymity because finance and identity breaches are a <em>massive</em> issue) from the issuer to the current holder and the contract would pay out automatically to that holder without having to travel through all the intermediaries.</p>

<p>Nothing is available externally at this point of course because banks love using open source technology without contributions. That may or may not change in the future. </p>

<p>If you are a blockchain developer, this would be the market to enter. Independent of the outcome of bitcoin itself, the blockchain as a financial system will have <em>plenty</em> of room for development of contract and token systems for years. Just look up all the incubators and companies in Switzerland that have launched in the last 2 years. Also, check out the history of Blythe Masters. Trust me, the finance sector knows how to capitalize on opportunities. </p>

<p><a href="http://www.huffingtonpost.com/don-tapscott/how-will-blockchain-chang_b_9998348.html" rel="nofollow noreferrer">Link</a> </p>
 44772: <p>Provenance is very important with OTC transactions. Many banks are comprised of thousands of tiny holding companies. How do you verify ownership? A decentralized Blockchain. Using a Blockchain, you can establish the chain of custody originating from the mining/genesis/issuance of the security.</p>

<p>Also trust (counterparty risk) is very important in OTC transactions. Lehman Brothers failure was directly tied to other banks not believing their solvency. With a decentralized Blockchain, if Lehman Brothers was 100% solvent, they could have signed a message using the private key associated to public addresses where hundreds of billions of securities were tied to.</p>

<p>There was a case where a foreclosed homeowner sued because they claim not to have borrowed money from "MERS" as reported on public deed information. The case had some level of merit since there was proof that MERS had the right to issue a foreclosure. A blockchain assigning these rights to MERS by the originating bank would have resolved such subjective issues in court.</p>
 48884: <p>Blockchains are best used when there are multiple entities that don't necessarily trust each other. So within one bank, a blockchain really isn't useful. However between bank transfers could use the blockchain. Right now, in order to send between banks, banks use centralized systems (ACH, SWIFT, etc) operated by a third party. With federated blockchains, they can remove most of that third party's involvement and thus save on fees and time. That's really the only good use case for banks using blockchains that I have heard of.</p>
