CHAIN-FINANCE is conducting an on-going survey on the use of blockchain or distributed ledger technologies in the financial services industry. The following directory highlights the companies, organizations and projects in the “Blockchain in Finance” ecosystem, the technology they have developed or provided, and the customers or partners that they are currently working with.
Citigroup have covered the topic of blockchain in a number of contexts. First areas were Securities Settlement and Global Transaction Banking. Their latest report dated 30 June 2016 is on the disruptive power of bitcoin in the payments market. Their overall impression is that bitcoin is unlikely to displace centralised payment systems in developed countries. That said, they found that there were interesting opportunities being explored by companies such as Circle, Bitpesa and Abra.
Citi Research Report seems to reach a definitive conclusion that a distributed ledgers biggest power is its ability to reduce the cost of reconciliation. Best use-cases being in areas where the data is most static. See as follows:
Having written three reports on the topic of blockchain, one common theme we have observed is the limited use-cases for the peer-to-peer transfer of value due to a number of issues including scalability, network adoption and lack of a legal/regulatory framework for dispute resolution. In our view, the best use for blockchain technology is where multiple parties need to trust and share information. Specifically, the ability to avoid third party intermediaries thanks to a trusted distributed ledger with an immutable transaction history can offer cost savings for financial institutions who currently must expend a lot of effort to reconcile data. The best use-cases seem to be where the data is relatively static (such as supply chain management, identity, and mortgage title), since we believe there are limitations on scalability for blockchain solutions.
Another interesting quote, this time about Government-backed digital currency projects:
A government-backed digital currency could be highly disruptive because it would allow non-bank entities to hold central bank accounts. There is a lot of excitement around the potential held by a government-issued digital currency. A governmentbacked digital currency would enable P2P settlement finality, as users would be able to transact with each other using central bank money, as opposed to commercial bank money. This creates a lot of questions around a new model for money creation and holding deposits. Allowing non-bank entities to have central bank accounts would drastically increase competition in the banking industry, and would also remove the need to rely on commercial banks and fractional reserve banking to create new deposits. Central banks would simply issue native digital currency directly to the population. Because of the momentous changes represented by such a shift, we believe that it will take many years of study before central banks implement a transition to digital currency.
Other noteworthy Citi projects in digital currency/blockchain:
Citicoin – Internal digital currency used by Innovation Lab