A new research by Misys, the provider of financial software solutions, in collaboration with research and consulting firm Celent, has identified use cases of distributed ledger technology (DLT) that go beyond bitcoin and cryptocurrency.

The research “Blockchain Beyond the Buzz” explores how DLT or blockchain technology, as it is commonly called, could benefit the wider financial services industry in the long term and highlights constraints that are preventing speedier progression and adoption. A closer look at DLT use cases across capital markets and corporate banking found multiple initiatives across the industry at proof of concept stage, with mass adoption anything up to a decade away.

“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,” said Boris Lipiainen, Global Head of Product Management at Misys. “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.”

The research identified corporate banking use cases in areas including cross border payments, KYC and trade finance, while capital markets use cases focus around improving post trade processing and inefficiencies across various asset classes, notably syndicated lending. It further found that with the exception of cross border payments, none have moved beyond simple proof of concept and into pilot stage to date.

“With unprecedented collaboration between financial institutions and technology providers, DLT has the potential to optimise business processes and eliminate inefficiencies between organisations”, said Patricia Hines, Senior Analyst with Celent’s Banking Group. “But a broad lens is required to maintain a true perspective on who the winners will be as the DLT ecosystem matures.”

The official release further said that mass adoption of the technology relies on stable network infrastructure and trust that it works. It expects the adoption rate to be slow even when the technology is developed, whilst it earns its credibility outside of bitcoin. Adoption is likely to come from concerted efforts of consortia, rather than dominant single players, it said.

“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,” said John Dwyer, Senior Analyst with Celent’s Securities & Investments practice. “As we transition from proofs of concept to implementation, financial services will be entering an important inflection point.”

Misys said that it is closely watching the evolving DLT landscape and is already looking at how the technology could transform the syndicated lending and trade finance space. It forms part of the company’s wider initiative to drive greater collaboration and connectivity in trade and supply chain finance, policy, FinTech and investment, through the World Trade Board. The goal is to help further stimulate financial inclusion and sustainability in global trade.