Saving 650$ Million Using LEIs
Research undertaken by McKinsey & Company and GLEIF estimates that the wider adoption of Legal Entity Identifiers (LEIs) could yield annual savings of over $150 million in the investment banking industry and up to a further $500m for banks in the issuance of letters of credit. The resulting white paper estimated that annual savings in investment banking would include at least 10% of total operational costs for onboarding clients and trading processing by using LEIs.
The takeaway for policy makers and corporates alike? Public interest standards are dual purpose. For example, capturing a national GAAP framework as an XBRL taxonomy might be intended to help companies prepare corporate returns to a government agency, but the resulting capabilities and network effect give rise to substantial private sector benefits. The LEI is a great example. There are already a number of XBRL examples, including the SBR Banken initiative, but there are many more that can be created.
Read the white paper here.