Deloitte: Blockchain reinvents the financial services industry
Deloitte Global report highlights use cases for distributed ledger technology to transform the industry
Distributed ledger technology (DLT), more commonly known as blockchain, is challenging traditional business models and providing new opportunities to reinvent financial services, according to a Deloitte Global report. “Over the horizon: Blockchain and the future of financial infrastructure,” addresses key uses for blockchain to transform the finance industry, while also highlighting potential challenges to adoption.
Drawing on research from Deloitte and the World Economic Forum, “Over the horizon” focuses on the ways in which blockchain technology has captivated the imaginations and wallets of the financial sector. The report details several use cases including payments, insurance, deposits and lending, capital raising, investment management and market provisioning, as well as necessary conditions where blockchain can flourish.
Furthermore, the report provides 5 critical steps for the implementation of blockchain systems:
1. Educate yourself in the technology, its disruptive potential and its effects on your business.
2. Work with business leadership to identity areas where DLT can present material gains or increase risks of disintermediation.
3. Categorize and prioritize these opportunities, then experiment with different technology solutions.
4. Develop business cases for successful experiments, create a plan to commercialize the solutions and identify barriers to scaling them.
5. Join (or create) networks for use cases that require collaboration.
“Organizations that follow these methods can be at the forefront of new opportunities for the industry. However, it’s important to note that though technological innovation has been fundamental to industry transformation, there are other steps that will play a role in this disruption as well. Before full adoption is possible, there are factors that need to be addressed, including an uncertain regulatory environment, lack of standardization efforts, and the need for a formal legal framework,” said Bob Contri, Global Financial Services Industry leader, Deloitte Global.
Ultimately, this technology is expected to bring simplicity and efficiency to the industry while working in tandem with other emerging technologies including biometrics, robotics and machine learning. DLT’s applications are far-reaching, helping companies solve a multitude of business problems in global payments, commercial property and casualty claims processing, syndicated loans, and trade finance, among others.
“While there is no doubting the transformative potential of blockchain technology, it is not a blanket cure for inefficiency in Financial Services. At this stage of evolution, the critical task is knowing where to focus your efforts. Blockchain is expected to have the greatest impact when applied to business problems involving: a shared repository of information, multiple writers, minimal trust, the presence of intermediaries and interdependencies between transactions. Without these conditions, blockchain may not be the answer,” added Rob Galaski, partner with Deloitte Canada.
As used in this press release, “Deloitte” refers only to the Deloitte Touche Tohmatsu Limited member firms.