Pilots and proof-of-concept projects of the distributed ledger technology have been on the rise among the most established financial institutions lately.
Blockchain-based money transfers may not leave the test labs any time soon, and the near-term applications of DLT will most likely begin quietly in bank backends.
An example of this is the vast number of intersystem data reconciliations across enterprises.
“There are lots of reconciliation issues across the data systems created between different geographies or just different departments within a bank,” said Igor Telyatnikov, COO at blockchains solutions provider AlphaPoint. “Blockchain technology is an elegant fix for those problems for multiple institutions and their various departments. I see these sort of cases deployed in just one to two years’ time.”
Similarly, this would largely be a result of more streamlined and optimized data quality, transparency, and internal controls. This is because the largest investment banks run extensive operations, making orderly reporting harder. Storing figures from these various components on a single electronic ledger would improve oversight.
Alpha Point announced this morning that it completed a proof of technology with Toronto-based Scotiabank. Telyatnikov did not disclose the particular projects implemented by the bank, but, according to a company statement, Scotiabank proved out “pragmatic, near-term implementations of this revolutionary technology.”
A recent study by capital markets research firm TABB Group found that more than half of the 150 firms surveyed experienced trade errors caused by incorrect position or cash data across different systems, mostly attributing this to poor reconciliation between systems.
“Capital markets firms have long accepted this need to continually replicate and reconcile data across internal systems (and the resulting exceptions) as a cost of doing business,” according to the report.
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