Misys is cutting through the Blockchain hype. An in-depth look at distributed ledger technology (DLT) use cases across capital markets and corporate banking reveals multiple initiatives across the industry at proof of concept stage, with mass adoption anything up to a decade away.
“With some reports suggesting we’ll be backseat drivers by 2020, the race is on to see which will come first – semi-autonomous vehicles on our roads in numbers or mass adoption of Blockchain,” said Boris Lipiainen, Global Head of Product Management at Misys. “Bitcoin and cryptocurrency was a strong use case for DLT and maximised the hype but moving it into other areas of financial services is extremely complex. We are on the precipice of an exciting technology-led transformation but it is early days and it isn’t yet clear how quickly Blockchain will become mainstream.”
New research by Misys and Celent – Blockchain Beyond the Buzz – identifies DLT use cases that move beyond bitcoin and cryptocurrency. It unveils how Blockchain technology could benefit the wider financial services industry in the long term and highlights constraints which are preventing speedier progression and adoption.
“With unprecedented collaboration between financial institutions and technology providers, DLT has the potential to optimise business processes and eliminate inefficiencies between organisations”, said Patricia Hines, Senior Analyst with Celent’s Banking Group. “But a broad lens is required to maintain a true perspective on who the winners will be as the DLT ecosystem matures.”
Corporate banking use cases include cross border payments, KYC and trade finance, while capital markets sees a focus around improving post trade processing and inefficiencies across various asset classes, notably syndicated lending. With the exception of cross border payments, none have moved beyond simple proof of concept and into pilot stage to date.
“Whilst investment in bitcoin-related ventures seems to have reduced over the past six months, investment in Blockchain technology unrelated to bitcoin has increased sharply,” said Alex Wolff, Head of Product Strategy at Misys. “It is an area that is set to transform the market and deliver significant benefits, including the ability to disintermediate central parties, eliminate reconciliation processes and reduce cost and lead time. However, there are formidable questions yet to be answered before Blockchain will be able to take hold.”
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