February 18, 2017
Blockchain will become adopted in the financial post-trade area in three to five years, according to almost half (48%) of the membership base of the Post-Trade Distributed Ledger (PTDL) Group1. In addition, just over a quarter (29%) of members believe blockchain will become adopted in as little as the next one to two years, though 21% forecast it will take in excess of five years.
The survey of PTDL’s global membership found that the top three benefits of distributed ledger technology will be operational cost savings (cited by 81%), increased efficiency/reduced settlement cycles (67%), and transparency (43%). In a reflection of the significance of the new technology, a fifth (20%) of respondents said that the strategic importance of blockchain within their own organization was ‘very high,’ with an additional 34% saying it was ‘high’; only 7% said it was a ‘low’ priority.
PTDL Group members are from all continents and include global banks, custodians, central securities depositories, clearing houses, exchanges, regulators, government agencies and central banks. The organization brings together major post-trade industry participants to share information and ideas about how distributed ledger technologies can transform the post-trade landscape. Its organizing committee is made up of representatives from CME Group, Euroclear, HSBC, London Stock Exchange Group and State Street.
Despite the compelling arguments for the adoption of blockchain, PTDL’s members warned that industry adoption remains the most significant barrier to implementing blockchain in a wider post-trade industry context – this was cited by 78% of respondents. Regulation (56%), a clear business need (55%), concerns around confidentiality (51%), and lack of standardization (49%) complete the top five in terms of impediments. Lack of available talent is seen as the least significant concern (23%).
Jörn Tobias, Managing Director at State Street and PTDL Group representative, said, The survey shows that blockchain could become mainstream in just a couple of years, with benefits such as better transparency, shorter settlement cycles and cost savings clearly identified by our members. The big barrier to growth, however, is seen as caution: fears over adoption and hesitation about embracing what remains cutting-edge technology. This is a core focus for the PTDL Group – engaging with financial services firms, technology companies and other stakeholders and helping catalyze adoption across the world for the benefit of all parties the financial post-trade area.