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Joern Tobias, State street

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Blockchain to become mainstream in financial post trade market within a few years

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Blockchain will become adopted in the financial post-trade area in three to five years, according to almost half (48 per cent) of the membership base of the Post-Trade Distributed Ledger (PTDL) Group. 

In addition, just over a quarter (29 per cent) of members believe blockchain will become adopted in as little as the next one to two years, though 21 per cent 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 per cent), increased efficiency/ reduced settlement cycles (67 per cent), and transparency (43 per cent). In a reflection of the significance of the new technology, a fifth (20 per cent) of respondents said that the strategic importance of blockchain within their own organisation was ‘very high’, with an additional 34 per cent saying it was ‘high’; only 7 per cent 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 organisation brings together major post-trade industry participants to share information and ideas about how distributed ledger technologies can transform the post-trade landscape.  Its organising 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 per cent of respondents. Regulation (56 per cent), a clear business need (55 per cent), concerns around confidentiality (51 per cent), and lack of standardisation (49 per cent) complete the top five in terms of impediments. Lack of available talent is seen as the least significant concern (23 per cent).

Jörn Tobias (pictured), Managing Director at State Street and PTDL Group representative, says: “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 catalyse adoption across the world for the benefit of all parties the financial post-trade area."

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