BLOCKCHAIN
like an entire mortgage process , including the underlying obligations , to be placed on the blockchain and become machine-readable , executable , and automated .
“ This will bring about the true financial potential that is currently missing , and even bring new stability to the existing finance world .”
The possibilities blockchain can bring to traditional financial services don ’ t stop there . Sidhu believes asset tokenisation will become “ an effective way to automate the security issuance process and democratise access to previously illiquid asset classes ”. “ Private equity is a good example – currently , private firms such as start-ups have limited options when raising capital . Tokenisation provides a pathway to open new markets and liquidity to these types of firms ,” he adds .
Post-trading clearing and settlement , too , is something Sidhu feels blockchain can help innovate , calling the current process highly inefficient and fragmented .
“ The industry currently spends over US $ 130bn annually in this area , so , unsurprisingly , organisations such as the Federal Reserve and Bank of England are experimenting with blockchain technologies to automate these processes .”
For Greiff , combining blockchain technology with distributed databases and streaming technologies will allow financial institutions to “ get real-time updates for on-chain transactions , and the ability to apply analytics to that data in real-time as well ”.
Scaling blockchain : the drawbacks While the scope for blockchain ’ s use at traditional financial institutions is evident , should barriers to adoption be overcome , it will need to scale significantly from its current models of use .
106 August 2023