Beyond the Buzz: Exploring Distributed Ledger Technology Use Cases in Capital Markets and Corporate Banking

by John Dwyer,  Patricia Hines, August 9, 2016
Industry Trends
Global

Abstract

Distributed ledger technology (DLT) has the potential to provide a new architecture for the financial system in corporate banking and capital markets. Financial institutions are starting to combine their financial, technology, and regulatory ecosystems to prove use cases for DLT, and a select few are moving towards implementation. This report focuses on the near-term to medium-term applications of the technology and where implementation is likely to emerge first.

Sponsored by Misys, Beyond the Buzz: Exploring Distributed Ledger Technology Use Cases in Capital Markets and Corporate Banking, is broadly set out in three parts:

  • The needs of financial institutions which are driving DLT architecture and the formation of consortia to accelerate the development of solutions in finance.
  • Use cases emerging in capital markets and corporate banking.
  • The path forward as a new future is shaped by the interplay of Fintech startups, established technology companies, incumbent financial institutions, regulators, and technology innovation from outside of the established consortia and partnerships.

“Each of the asset classes presents different challenges in terms of ‘pain points’ and how the technology can be structured to address them,” comments John Dwyer, senior analyst with Celent’s Securities & Investments practice and coauthor of the report. “Furthermore, capital markets use cases are at different stages, with some having conducted tests to prove concepts, while others have merely made announcements.”

“As a sector largely driven by transaction processing, distributed ledger technology has the potential to greatly improve corporate banking services,” says Patricia Hines, senior analyst with Celent’s Banking Group and coauthor of the report. “With the promise to improve visibility, lessen friction, automate reconciliation, and shorten cycle times, corporate banking use cases have attracted significant attention and investment.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

2

 

Key Research Questions

2

Financial Institutions’ Needs

6

State of Play

7

 

Consortium Approach

7

 

Bank-Run Initiatives

11

 

Ensuring Interoperability

12

 

Introducing Governance

12

 

Focus on Regulation

13

Beyond the Buzz

14

Use Cases in Capital Markets

15

 

Post-Trade Processing

15

 

Credit Default Swaps

16

 

Cash Equities Clearing

18

 

Repurchase Agreements

19

 

Syndicated Loans

21

 

Private Company Securities

23

Use Cases in Corporate Banking

25

 

Traditional Trade Finance

25

 

Supply Chain Finance

27

 

Cross-Border Payments

30

 

KYC/Digital Identity Management

34

The Path Forward

37

Appendix 1: Key Capital Markets Initiatives

41

Appendix 2: Key Corporate Banking Initiatives

42

Leveraging Celent’s Expertise

43

 

Support for Financial Institutions

43

 

Support for Vendors

43

Related Celent Research

44

Sign in to download reports and access personalized information