Blockchain is one of the most talked about technology innovations in finance today. Traditional financial institutions blockchain technology pushing the envelope in fintech companies as banks run on IT systems built decades ago and as a result are inefficient, opaque, and cumbersome.
Blockchain can potentially overcome many of these legacy issues. Blockchain introduces an innovative business model for transferring financial assets that uses cryptographically secured networks instead of myriad third-party intermediaries. Blockchain technology pushing the envelope in fintech companies most significant benefit of blockchain is that it can eliminate inefficiencies in existing markets and drive faster, lower-cost, transactions that are more efficient and provide increased liquidity, transparency, and security.
The blockchain offers trust for the user, eliminating the need for the intermediary and mitigating the risk of human error with complete automation. Financial institutions including banks, clearing houses and exchanges have become excited at the prospect that blockchain might overhaul, if not fundamentally transform their business models.
Currently most institutions and startups are focused on three inefficient markets that are deemed ripe for an overhaul: Financial heavyweights and prominent bankers have lent their support to exploring this technology and publically highlighting its transformative potential to overhaul existing systems. Blockchain solutions might be rolled out for syndicated loans as early as Q2some use cases such as derivatives may still take at least two to five years to materialize.
However, the equity settlement adoption is still at least a decade away. We cannot ignore the hundreds of millions of dollars the banks would have to spend on integrating this new technology with existing systems blockchain technology pushing the envelope in fintech companies workflows.
Some within our industry look at blockchain as a disruptive technology that will replace all clearinghouses. Our analysis indicates that this is not necessarily true. In fact, the exact opposite may be true. Instead of replacing these institutions, blockchain may facilitate their growth depending upon the markets they exist within and the limitations of their individual charters.
There is a lot of testing and proving that needs to be done before this technology becomes mainstream in the financial industry. However, when talking about blockchain adoption within financial markets, there are several challenges that need to be addressed before we see this technology become mainstream. Blockchain requires further due diligence for defining industry standards with regards to settlement, counterparty and other transactional risks involved.
The market needs regulations to maintaining a balance between security and future mass-market blockchain scalability. This note also highlights the initiatives of a number of the startups in this space including Chain, Digital Asset Holding, Hedgy, Ripple, R3, and Symbiont. Skip to main content. Pushing the Envelope in FinTech.
Shagun Bali, Terry Roche. Executive Summary Blockchain is one of the most talked about technology innovations in finance today. Areas of Interest FinTech.
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