Financial institutions like investment banks face major bottlenecks in recording securities & loans that spawn the web. This is where, as per Accenture, such firms could trim costs by $10 Billion, annually, using the technology of a distributed ledger. Clearinghouses that are still living with a foot in the past, will face better prospects of cost-cutting.
Manual messaging and reconciliation would be reoriented thanks to a multi-channel access to an updated ledger. The Australian Securities Exchange is already on its way, undertaking significant post-trade settlement structuring. Helping them is the New York-based Digital Asset Holding, a blockchain startup that raised its Series B round last year.
Bitcoin rose to prominence as the first standalone, decentralized currency. Soon, me-too digital currencies cluttered the market building upon bitcoin’s shortcomings. The same trend would now engulf banking. Banks are expected to counter the anti-centralized sentiment with tokens of their own facilitating faster payments.
Japan’s J-Coin along with UBS’s Utility Settlement Coin, could serve as an illustration of what’s in store for the future. Speaking of payments, two companies that have been in news for locking horns are Ripple & Swift. The former ranks third in market capitalization on the crypto-currency planet while Swift is an inter-bank-messaging system, used to send money. RippleNet has already bagged 11 of the world’s largest banking corporations as its clients. All this while pioneering faster cross-border payments.
Times have moved forward yet a majority of businesses still refuse to accept technological feats, let alone implement them. World-Trade still delves into those cumbersome practices which involve lading bills and letters of credit.
Though digitization has touched base with many allied sectors, yet trade is one place, it needs to make an entry in. Or has it already? Companies like the Bolero (UK) Wave (Israel) & EssDocs (Malta) are moving great lengths to effectuate a paperless movement of business articles. Result – the package that earlier took a week for attestation will now be ready for safe-keeping Within hours or even minutes. Crypto-currencies like Factom & Ethereum with their smart contract USP might also hold the key to such challenges.
Anti-Money Laundering & Know-Your-Customer are two of the cardinal priorities for banks around the world, in terms of Identity Protection/Verification. After all, who would trust an enterprise with their money, if the company is rather a safe-haven for unfavourable elements of the society?
Solution – Industry experts claim a centralized database, securing customer profiles cryptographically would do the trick. Moreover, it's not all theory without a practical. The Cambridge blockchain, Tradle and Credits & Blockstack are a step in that very direction. In addition to that, R3’s much-hyped Corda (blockchain based OS) is working towards achieving the same objective.
For much of the last century and also the current, syndicated loans had been settled using facts. Imagine the paper trail. It is almost disappointing to know that a loan settlement between two parties, in the 21st century could take up to days to be registered efficiently.
Again, one of the substantial fixes is in the peer-to-peer like the framework of the ledger. What if two separate blockchains could interact with one another publishing fund transfer in near real time. The possibilities are endless as per Credit Suisse, which is one amongst the many Financial bodies to have on-boarded the consortium dedicated to finding a solution. Yet, the technology would come in handy.