Market still confused by blockchain uses

The uses of blockchain technology remain unknown to the majority of clients despite great progress being made in 2016, according to an industry expert.

Speaking at the Misys connect forum in London, panellists discussed how the technology has moved on from the hype in 2015 to delivery in 2016.

Cillian Leonowicz, strategy and operations manager for financial services at Deloitte, stressed that huge parts of it remain an unknown quantity.

“In spite of last year’s progress we have identified that blockchain is not a panacea, around 90% of clients are coming to us with issues that blockchain is not suitable for.

“The cost benefit aspect is a huge unknown, for example someone said to me we could use blockchain and move from a T+3 settlement cycle to a T+0 cycle and have it in real-time, but paying a data provider for this in real-time will cost a fortune,” said Leonowicz.

Fellow panellist John Dwyer, FinTech research analysis at Celent stated that blockchain development in 2016 had gone so far that industry participants may announce developments that could still be unproven.

“2015 was the year of hype which we are still coming off, but in terms of what has been achieved, I do think 2016 is showing evidence of delivery as we have looked at proof of concept.

“There is also a race for getting an announcement out over tangible evidence so clearly there is a skew towards being at the announcement stage,” said Dwyer.

Blockchain technology has been hailed by custodians as being the future of the industry with potential to streamline processes such as settlement, clearing and corporate actions.

Following increased discussion and speculation at the end of 2015, recent months have seen the industry increase its engagement with the technology.

Earlier this month financial innovation firm R3 added China Merchants Bank (CMB) to its blockchain partnership designed to apply the technology across global financial markets.

In addition this August, custodian banks BNY Mellon and Deutsche Bank have joined the Utility Settlement Coin (USC) initiative, designed to facilitate payment and settlement for institutional markets using blockchain technology.

Dwyer also concluded by stating that blockchain needs to prove itself in certain areas most notably how ledger technology can be “commercialised” and an industry standard developed.