Blockchain technology will be widely used in capital markets within six years, completely changing the settlement model for securities, according to a recent Deutsche report.
“Blockchain may completely change the settlement model for securities processing, creating a utility around securities processing and cash management,” says Deutsche Bank’s Rhydderch. “The entire back end would become a far more efficient, far less costly, more accurate and less risk-prone function. This has an obvious knock-on effect on the cost of service provision. In the administration space, Blockchain may not be quite the disruptor. It’s more in the functional utility elements within the securities processing settlement chain. In that context, it may be totally revolutionary.”
“I think the banking industry is quite slow to accept change,” says the head of investment at a Northern European sovereign institution, who expects active Blockchain in the current web of legacy infrastructure. They’re trying to determine how it can be deployed in a way that works, given ongoing data protection and security concerns. They’re also trying to figure out how to transition from the older infrastructure to this entirely new system.”
Of some 200 financial market participants queried by the report, three quarters see Blockchain technology being widely used within the next three to six years, while half report that this could help the industry cope with the risk of system failure and market disruption.
A whopping 87 per cent think that Blockchain could completely change the settlement model for securities therefore securities clearing and settlement will become more efficient, driving down costs. And almost two thirds expect the introduction of Blockchain technology to produce savings of between 11-25 per cent.
See report here.
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