Distributed Ledger Technology
From certainty and immutability to smart contracts, disintermediation of market players to compliance benefits, blockchain is emerging as a disruptive force, having the capability of reshaping the financial services industry.
In the banking and financial industry, distributed ledger technology (DLT) may have the potential to introduce a range of benefits for customers, firms and regulators. Primarily, DLT technology models may provide efficiencies in reconciling records both within organisations and across firms, and offer distinctive attributes through the incorporation of tools, such as alternative rules in the underlying protocol, electronic signatures, and smart contracts. Other features that have been attributed to the blockchain technology include the enhancement of security in payments and credit card fraud area through a decentralised transaction, the replacement of trusted third parties, through providing access to all participants in the value chain, a complete automation of transactional procedures, from payment to settlement, and a reduced margin of error through live tracking of transaction network users.
At present, there are 90 central banks across the globe engaged in DLT discussions worldwide, and 90 corporations (financial institutions and banks) have joined blockchain consortia, whilst 80% of banks across the globe are predicted to initiate DLT projects by 2017. In addition, more than 2,500 blockchain-related patents have been filed over the past two years.
Yet, it is arguably in the securities services market that blockchain technology may have the greatest potential. According to a recent survey from Deutsche Bank, a majority of financial markets players (87%) believe that this technology may completely reshape the settlement models for securities, with clearing and settlement processes becoming more efficient and less costly. In addition, 62% believe the introduction of blockchain technology will produce substantial savings ranging from 11% – 25%, whilst almost half (48%) stress that it will help the industry become more resilient to system failure and market disruption risks.
Overall, 78% see this technology being used on a regular basis within the next three to six years.
 Yessi Bello Perez, “Santander: Blockchain Tech Can Save Banks $20 Billion a year,” CoinDesk, June 2015
 World Economic Forum, “The Future of Financial Infrastructure: An Ambitious look at How Blockchain can Reshape Financial Services”, August 2016.
 Deutsche Bank, “Powering the Flow of Global Capital”, October 2016.