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Financial Services Blockchain Revolution

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In what ways, and on what timelines, do you see blockchain and related technologies disrupting financial services?

Blockchain Technology
Blockchain
Financial Services
Regulatory Compliance
Anthony S. Dell, JD, LLM
10 months ago

7 answers

1

Hi Anthony:
Big question but blockchain adoption in FinTech has been aggressive since 2016 with Private Equity funding for early stage firms surging from $3B to $35B last year. The key area of payments processing has been critical as have been the Smart Wallet areas of PayPal and Apple Pay. If you can narrow your interest area, perhaps I can be more helpful. Meanwhile, you can check out CBI, Business Intelligence and Pitchbook. Always follow the money flows.....
Pip

Pip Barton
10 months ago
Thanks, Pip! I'm also getting more and more involved in how it will impact the back offices of financial services companies. I've been in compliance for a long time, and I see the back office (including Compliance) as absolutely ripe for serious technological disruption, especially from DLT/Blockchain and other advancing tech. - Anthony S. 10 months ago
1

Personally, what people are telling me is that block chain is lkely to be adopted for some functions in the financial services idustry but it will hardly be disruptive. PayPal, for example, moves money from ypuu bank to another bank and holds it in PayPal's bank in between. That is convenient and less expensive but not disruptive. FINRA published a report on DLT last spring that went into quite a bit of detail, in part, because they included some pretty good peple in the study group. It is a good place to start. As to a tme line, one of the things that FINRA noted is that decentralized system will always have security iand compliance ssues. I worked in the industry in the 1970s when it switched over from paper order tickets to computers.In retropect that transition went remarkably well but it was not flawless.

Irwin Stein
10 months ago
Thanks, Irwin. I'm seeing firsthand a very different experience in terms of the disruption to financial services, including back offices, exchanges, transfer agents, recordkeeping, custodians, and all the other infrastructure players. The trend is already underway, and I won't be surprised to see a significant percentage of human jobs replaced by computers, software, and bots in the ears to come. - Anthony S. 10 months ago
1

Multiple governments (Singapore, Russia among top) are actively investing into exploration and implications of Blockchain and digital currencies. Is that significant enough to call it a disruption of economic world? I would think it is. So in terms of timeline, it has already disrupted.
In what ways is a much broader question. Financial world sees the biggest intermediation in most activities, and therefore incurably susceptible to Blockchain, or likewise technology.

Sibendu Das
10 months ago
1

Well if you have a job in the financial service industry, it already is starting to disrupt the number of people used in back offices for settlement etc. Initially efficiency gains will cull 10's of thousands out of the back office due to efficiencies of a shared ledger. Layoff due to efficiencies started on small scale in 2017 and will crest in the next 3-5 years. Having worked on several of the top banks in the world proposals, initial gains will be private blockchains internally for efficiency.

Long term Blockchain software and Crypto currencies will dramatically change the entire way the financial industry is structured.

James Barry
10 months ago
1

Block chain is already being used in financial services, and most prominently in the R3 Corda Ledger - the financial services portion of the internet of things hyper-ledger. The disruption has been extreme, most notable being the reduction of the trade-confirm-settle cycle for equities to under a minute - versus the current two days.

The NYSE trades a conservative 25 Billion/Day of equities. Reducing the cycle to a minute saves 50 Billion of working capital that no longer needs to be financed. An industry savings of 1.387 Billion/year per 1% of interest cost - on just one exchange. As the Corda ledger is not restricted to just the NYSE, the working capital interest savings extend to the globes major exchanges as well - producing a collective interest saving well above this.

Martin Butcher
10 months ago
Martin that will certainly be the case when implemented accross the NYSE, but its not there yet. WIth Goldman Sachs √ dropping out of R3 We will see if that comes true. Sweetbridge is looking at reducing working capital in the supply chain and saving 10's of billions, but it too is not there yet. - James 10 months ago
0

I think it all comes down to adoption of blockchain-based products and services by the end consumers.
Don't forget, that right now we are still talking about building the foundation for the products and services - one of the lower layers of the technology stack.
It will require a simple application, like the Etherium-based Cryptokitties (yeah, it's dumb but generates millions) for the mass adoption to gain traction. Something like a incumbent bank-backed p2p payment app or a solution involving smart contracting.
Then again, it could go very quickly - the hype around blockchain and cryptocurrencies is real and has a massive reach and growth momentum.
Any respectable traditional institution to roll out a blockchain-based fintech solution could reap massive rewards.

Vitali Auracher
10 months ago
0

The time is now... The financial sector is being disrupted as we speak and it is in the process of being restructured as these types of institutions are scrambling to find ways to adapt via permissioned or private blockchains... This sector will face an uphill battle in securing permissioned or private networks due to the lack of masternodes... Sector must find ways to compensate or incentivise those willing to maintain a masternode beyond just a few security tokens or coins... The financial sector must be prepared to compensate masternode holders above and beyond what a Financial Sector CEO would receive, this requirement alone will decide whether the financial sector remains relevant or obsolete...

Robert "BitRebel" Tiger
1 month ago

Have some input?