Page 22 - February 2018 Disruption Report Flip Book

THE FUTURE FINANCIAL INFRASTRUCTURE FJEABNRUUAARRYY 22001188
Re-engineering – the cost/benefit trade-off needs to be more attractive than enhancing existing legacy systems, since re-engineering costs could be large.
Misaligned incentives of ‘collaborators’ – some industry participants are threatened. Others see a massive opportunity to replace outdated legacy systems. But value is limited within the boundaries of one organisation – who funds the building of new, shared infrastructure in the current environment of reduced return on equity (RoE), cost control, and regulatory pressure?
Evolving the right standard – eco-system participants must agree on standards. Inter- operability is required to scale (e.g. across public and permissioned blockchains).
Scalability of solutions – the chosen solution needs to scale, potentially to high frequency trade volumes.
Governance – who validates transactions, screens participants, maintains the blockchain and arbitrates security and rule changes?
Regulation – Global regulators need to be brought on the journey. Tools like the FCA Sandbox could help.
Security – identity and key management and encryption strength. What happens if I lose my key? I don’t want to lose my identity and all my assets. (Mortgage Finance Gazette, 05/01/17)
Use case: Integrating blockchain technology into the asset securitization process
In the white paper, Applying Blockchain in Securitization: Opportunities for Reinvention, the Structured Finance Industry Group, Chamber of Digital Commerce and Deloitte provided the following infographics on how blockchain technology can reinvent the securitization industry.
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