Blockchain faces hurdles in industry ‘unaccustomed to cooperation’

The benefits of Blockchain in the securities services industry will only be unlocked if the industry works together to overcome multiple challenges, according to a new report.

Research from Euroclear and Oliver Wyman expects distributed ledgers to address a number of inefficiencies in the market, but has identified six hurdles which must be overcome.

These include scalability, regulation and common standards and governance.

The paper highlights the importance of cooperation in the securities services industry, a concept which the papers said firms are unaccustomed to.

“In order to work together to shape a new future, the industry needs to take a collective view on the potential of the technology, which was the intention of this study. The market must embrace this potential, show patience with this development and invest in various innovative solutions to bring it to reality,” said Angus Scott, head of product strategy and innovation, Euroclear.

Blockchain has been heavily invested in by some of the world’s biggest institutions as they try to unlock the potential of the technology.

Euroclear’s paper Blockchain in Capital Markets: the Prize and the Journey says the technology could give universal access to transparent, real-time data which would create many benefits for the industry, along with more efficient settlement and asset servicing.

It also identified that direct savings from blockchain would need to come from the decommissioning of redundant or duplicative systems, reduced operational overheads and cost-sharing across institutions.

Recognising the huge interest in Blockchain technology, Global Custodian is holding a panel discussion around the phenomenon at its annual Leaders in Custody Gala Dinner and Awards Programme for European Markets.

The event will be taking place on 17 March at Simpson’s in the Strand. To register, sign up here.