I am really looking forward to the upcoming Blockchain for Finance Conference (BFC) on October 3-4 here in Dublin.
The conference will focus on the Finance sector and how Blockchain is progressing as an emerging technology for clients in this space.
The Financial sector has been quite active both here in Ireland and internationally in developing use cases using Blockchain DLT. Citi, Northern Trust, Credit Suisse, State Street, JPMorgan, BNP Paribas and Santander are leading the way creating innovative prototypes albeit many of the use cases we are seeing are quite intra-departmentally focused (data governance) or in a limited bi-lateral or tri-lateral external network (T0 trades settlement)
In reality, it is hard to see the widespread replacement of many inter-bank networks and platforms with Blockchain DLT unless there is a case made for a breakdown of trust between these peer banks in their network security due to some unforeseen event like a cyber-attack. Most of the databases and messaging platforms within the banking sector , although not perfect, still function well enough and have been heavily invested over the last number of years, so it will be interesting to hear from the contributors how the business cases have evolved in the last 12 months where it was clearly an issue last year for business sponsors to understand what problem Blockchain was going to solve that they currently didn’t have. Trust is not an issue within closed circuit banking networks today.
New external supply chains, like KYC/AML or pre-existing fragmented processes like Trade Finance or Hedge Fund process flows, on the other hand, are a different matter and this may be an area where the technology can really play a role to create an efficient and more robust transaction flow across multiple parties with little existing infrastructures, except for the good old MS Excel tools and email.
We can expect to see further development of use cases like Proxy Voting, Voluntary Corporate Action elections and the aforementioned Trade Credit Finance as obvious use cases where some level of external interaction is required and Blockchain makes sense as a technical solution although the return on investment for the business case could be somewhat problematic on lower transaction volumes.
In the end Business must drive tech, not the other way around!
I will keep you posted on how the conference in Dublin went in my next blog.
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The role and market of custodian banks - or Fund Service Providers, to use a more representative term – are rarely the subject of analysis as their services and corresponding market data is even more rarely available.
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