steps, stairs The wider adoption of blockchain technology by financial incumbents is likely to take place over four stages according to a new report by business management consultant firm McKinsey & Company.
Entitled "Beyond the Hype: Blockchains in Capital Markets", the report states that blockchain technology will "dramatically reshape the capital markets industry", impacting business models, cost savings and capital requirements in the sector.
McKinsey contends the adoption of blockchain technology will have significant near-term benefits, bringing faster clearing and settlement to the capital markets, while reducing the number of ledgers needed to be maintained by financial institutions and ensuring audit trails are more precise.
However, McKinsey’s chief finding is that the financial industry needs to move in unison to unlock the benefits of the blockchain, a conclusion that supports recent efforts by major banks to back efforts like distributed ledger consortium R3 .
The report states: "The full potential of blockchain technology will only be realized through cooperation among market participants, regulators and technologists and this may take some time." Roadblocks to deployment, the report suggested, include the irreversible nature of blockchain databases, which would require that those who participate in running such a network agree on mechanisms to resolve conflicts.
However, the McKinsey report does provide a detailed roadmap for how it expects this transition to play out, despite challenges, providing financial institutions with a window into how they might be able to prepare for the transition to distributed financial technologies. Four stages
Armed with these benefits, McKinsey argues the rollout of the technology will occur in four steps, with a distributed ledger first uniting all of a financial institution’s legal entities.
In this scenario, each of a company’s legal entities would act as a "node and bookkeeper" on the distributed ledger, a development that would provide the organization the chance to "rewire" […]
