Blockchain technology is set to lead a major disruption in financial services over the next few years, a new WEF report shows.
Distributed ledger technology (DLT), the World Economic Forum (WEF) and Deloitte have found in new research on disruptive innovation, could create value for the sector in six distinct ways.
Namely it simplifies operational processes, makes regulatory monitoring of financial activity more efficient, reduces counterparty risks as well as the time it takes to clear a transaction, it improves capital and liquidity, and finally it minimises the chances of fraud.
This will make it one of the founding technologies of the next generation of financial services infrastructure, the report says.
Blockchain is expected to be in high demand from banks over the next year, as 80 per cent of them are seen launching DLT projects by 2017, according to the WEF.
The technology will put banking to the challenge in three major ways – by disrupting the process of international payments and wire transfers, the repackaging of mortgages and the banks’ compliance reporting to regulators.
Although it is a great candidate to be on the forefront of a massive disruption, blockchain still does not have all necessary attributes for that, the WEF notes.
A main barrier for DLT currently is that it does not have the capacity to meet the high volume and high velocity demands of financial markets, WEF fintech project head Jesse McWaters states.
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