Financial institutions will increasingly adopt blockchain and distributed ledger technology in the post-trade space over the next three to five years, according to a survey of member firms in the Post-Trade Distributed Ledger Group.
Almost half of firms surveyed at the end of last year said they expect the industry will adopt blockchain technology for post-trade processes in the next three to five years, while nearly 30% expect adoption to occur sooner. One in five don’t expect to adopt blockchain for over five years.
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PTDL is a group of about 40 global financial institutions that aim to collaborate on distributed-ledger best practices. Its organizing committee includes representatives from CME Group, Euroclear, HSBC, London Stock Exchange Group and State Street.
Fifty-four percent of respondents said that in their own firms, blockchain’s strategic importance was high or very high. Just 7% said it was a low priority.
The survey asked about the specific benefits and challenges of implementing blockchain. Cost savings were far and away the top benefit, with 81% of respondents siting reduced costs in operations as the main benefit. Two-thirds cited increased efficiencies as a benefit, and 43% pointed to transparency.
The main obstacle to firms that want to implement blockchain is the reluctance of other firms to do the same. Almost 80% of firms said low adoption in the industry is the most significant barrier to wider use of the technology.