Page 16 - February 2018 Disruption Report Flip Book

THE FUTURE FINANCIAL INFRASTRUCTURE FJEABNRUUAARRYY 22001188
77% of countries represented in the study have multiple institutions showing an interest in DLT.
• Public sector institutions are experimenting with a variety of DLT protocols: 63% of central banks and 69% of other public sector institutions (‘OPSIs’) have already been involved in proofs of concept and/or running trials; OPSIs are generally further ahead than central banks.
• Ethereum has been widely tested at central banks: 57% of central banks are experimenting with either the public Ethereum network or a permissioned version.
• Existing DLT deployment plans: 15% of OPSIs plan to deploy DLT- based applications this year, and another 23% plan to do so within the next two years; the timetable for central banks is more conservative than for OPSIs. (Global Blockchain Benchmarking Study, Dr. Garrick Hileman and Michel Rauch, 2017)
“Blockchain promises to upend traditional banking models of trusted intermediaries but introduces scalability and performance issues, and requires greater collaboration with heretofore rivals
to create economies of scale,” wrote Cognizant analysts. “Moreover, the introduction of a decentralized network threatens to undermine stable revenue models and will require a large investment in system integration services to connect legacy systems with shared infrastructure and distributed ledger ecosystems.” (How Digital 2.0 Is Driving Banking’s Next Wave of Change, Cognizant, 09/28/17)
Use case: Re-engineering the mortgage lending process with blockchain technology
Blockchain technology, which records and tracks transactions in a decentralized ledger, is poised to revolutionize many aspects of banking. This technology is particularly relevant to lending—a contract sensitive process with an extensive lifecycle that carries risk and, as currently structured, has limited trust across the value chain. Three of blockchain’s features—the smart contract and distributed ledger to securely store data and digital payments to facilitate asset transfers—are uniquely suited to handle the life cycle of lending from origination to funding through fulfillment and servicing of a loan.
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