Misys, a financial services provider, has conducted an in-depth look at distributed ledger technology use cases across capital markets and corporate banking before concluded that multiple initiatives across the industry are still at proof of concept stage, with mass adoption anything up to a decade away. The Misys portfolio of technology solutions seek to support network integration and help banks take advantage of the blockchain movement when the market develops.
Boris Lipiainen, Global Head of Product Management at Misys, remarked: “We are on the precipice of an exciting technology-led transformation but it is early days and it isn’t yet clear how quickly Blockchain will become mainstream. With some reports suggesting we’ll be backseat drivers by 2020, the race is on to see which will come first - semi-autonomous vehicles on our roads in numbers or mass adoption of Blockchain. Bitcoin and cryptocurrency was a strong use case for DLT and maximised the hype but moving it into other areas of financial services is extremely complex. We are on the precipice of an exciting technology-led transformation but it is early days and it isn’t yet clear how quickly Blockchain will become mainstream.”
New research by Misys and Celent – Blockchain Beyond the Buzz – identified blockchain use cases that look beyond cryptocurrency applications. It describes how blockchain technology could benefit the wider financial services industry in the long term and highlights constraints which are preventing speedier progression and adoption.
Senior Analyst with Celent’s Banking Group, Patricia Hines explained: “With unprecedented collaboration between financial institutions and technology providers, DLT has the potential to optimise business processes and eliminate inefficiencies between organisations. But a broad lens is required to maintain a true perspective on who the winners will be as the DLT ecosystem matures.”
Corporate banking use cases include cross border payments, KYC and trade finance, while capital markets sees a focus around improving post trade processing and inefficiencies across various asset classes, notably syndicated lending. Misys stated that , with the exception of cross border payments, none have moved beyond simple proof of concept and into pilot stage to date.
Alex Wolff, Head of Product Strategy at Misys, remarked: “Whilst investment in bitcoin-related ventures seems to have reduced over the past six months, investment in Blockchain technology unrelated to bitcoin has increased sharply. It is an area that is set to transform the market and deliver significant benefits, including the ability to disintermediate central parties, eliminate reconciliation processes and reduce cost and lead time. However, there are formidable questions yet to be answered before Blockchain will be able to take hold.”
It is expected that even when the technology has progressed, uptake may be slow whilst companies learn to trust its application outside the cryptocurrency sphere. Adoption is likely to come from concerted efforts of consortia, rather than dominant single players, like R3.
Senior Analyst with Celent’s Securities & Investments practice, John Dwyer commented: “All parts of the financial services ecosystem are collaborating and competing in distributed ledger technology as we speak. Leading global financial institutions, FinTech start-ups, BigTech and regulators all recognise the transformational potential of this technology. As we transition from proofs of concept to implementation, financial services will be entering an important inflection point.”