In a recent survey, Deutsche Bank has found that technology threatens to disrupt market as a whole, adding that blockchain disruption may be coming sooner than expected.
According to the survey results, the report, titled “Powering the flow of global capital: Capital markets investor insights”, says that market participants understand the challenges they face and are prepared to adapt in their pursuit of opportunity.
The bank said that distributed ledger technologies (DLTs) could replace the current model of a single central ledger and record-keeping based on labour-intensive reconciliations to a post-trade process involving shared datasets. It added that theoretically, the blockchain model has the potential to streamline many current support operations or make them redundant.
“Blockchain may completely change the settlement model for securities processing, creating a utility around securities processing and cash management,” says Deutsche Bank’s Rhydderch. “The entire back end would become a far more efficient, far less costly, more accurate and less risk-prone function.”
When asked about blockchain technology, 87% respondents believe that blockchain and distributed ledger technology will have an impact on the market for securities services; 78% respondents expect this technology to be actively used within the next six years; 38% think blockchain could reduce the cost of providing securities services by more than 20%; and 48% think that systems failure (and subsequent market disruption) is the most important risk that blockchain technologies could reduce.
“I found it interesting that our survey’s respondents were clearly positive about the potential impact of blockchain — almost all participants saw it as either moderately or completely disruptive to existing business models — and an overwhelming majority believe it will be actively used within the next six years”, Deborah Thompson, head of Custody and Clearing, said.
In addition, the link between blockchain and security is highlighted by 31% of respondents in the survey. Notably, in addition to using advanced data analytics and real-time monitoring to combat cybersecurity threats, almost all survey respondents expect to make use of cloud services within the next three years however, machine learning and artificial intelligence (AI) are being considered by only a third of respondents.
