McKinsey Report States Blockchain Will Dramatically Reshape the Capital Markets Industry

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Consulting firm McKinsey & Company has stated in a fresh report that the wider adoption of Blockchain technology by financial incumbents will probably take place in the near future development but will require close cooperation among market participants, regulators and technologists.

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Their report “Beyond the Hype: Blockchains in Capital Markets”, says that Blockchain technology will “dramatically reshape the capital markets industry”, impacting business models, cost savings and capital requirements in the sector and the adoption of Blockchain technology will have significant short term benefits, bringing faster clearing and settlement to the capital markets, while reducing the number of ledgers needed to be maintained by financial institutions and ensuring audit trails are more precise.

But they are worried about fragmentation and the chief worry appears to be that the financial industry needs work together to reap the benefits of the Blockchain, a conclusion that supports recent efforts by major banks to back efforts like distributed ledger consortium R3 and also with the more recent Linux Open Source collective – the ‘Open Ledger Project‘.

The report said blockchain technology is likely to deliver a range of benefits across the capital markets value chain, from clearing houses and exchanges to prime brokers and banks. However McKinsey also warned that the technology is still largely unproven in complex markets. Other challenges in developing applications include not being able to amend blockchain transactions after the fact, the digitization of assets, asset disposition, position netting and computing power.

“Banks will also face challenges related to market, legal and operational protocols, issues concerning adoption and route to market, and interoperability, as well as internal hurdles related to expense pressures, technology architecture design and cultural resistance,” added McKinsey.

The report said there is potential for central banks to simplify and de-risk the wholesale deposit and payments processes by facilitating digital settlement for banks. The Bank of England is conducting research on central bank–issued digital currencies.  In September Andrew Haldane, chief economist at the Bank of England and executive director, monetary analysis and statistics, said in a speech that it may be possible for government-backed currency to be issued in an electronic rather than paper form.

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About Richard Kastelein

Founder and publisher of industry publication Blockchain News (EST 2015), a partner at ICO services collective Token.Agency ($750m+ and 90+ ICOs and STOs), director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of some two dozen Blockchain startups and has written over 1500 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat. Irish Tech News put him in the top 10 Token Architects in Europe.

Kastelein has an Ad Honorem - Honorary Ph.D. and is Chair Professor of Blockchain at China's first Blockchain University in Nanchang at the Jiangxi Ahead Institute of Software and Technology. In 2018 he was invited to and attended University of Oxford's Saïd Business School for Business Automation 4.0 programme.  Over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the European Commission's SME Instrument programme as a startup assessor and as a startup judge for the UK government's Innovate UK division.

Kastelein has spoken (keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London (5x), Manchester, Minsk, Nairobi, Nanchang, Prague, San Mateo, San Francisco, Santa Clara (2x), Shanghai, Singapore (3x), Tel Aviv, Utrecht, Venice, Visakhapatnam, Zwolle and Zurich.

He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. He's written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and, and his work and ideas have been translated into Dutch, Greek, Polish, German and French. A journalist by trade, an entrepreneur and adventurer at heart, Kastelein's professional career has ranged from political publishing to TV technology, boatbuilding to judging startups, skippering yachts to marketing and more as he's travelled for nearly 30 years as a Canadian expatriate living around the world. In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, 'The Hitchhiker's Guide to the Seas' travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he's raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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