be assured that data will be in the correct format , with nothing out of date relative to what everyone else on the network sees . With blockchain as a foundation , you can redesign processes to amplify automation and raise STP to new levels .
The potential of blockchain to optimize processes and increase automation is being discovered not only by the financial services industry , but also by other industry sectors from transportation and logistics to government and life sciences . A private , permission-based blockchain network opens new opportunities that are just starting to come to fruition , and financial institutions will be among the first to take advantage of these opportunities .
What happens when the global financial system transitions from a messaging network into an information-sharing network ? The envisioned end state :
n Legacy core systems will shrink in scope and functionality given the availability of shared ledgers that contain a more accurate , timely version of the financial information within a marketplace .
n Message traffic will dry up for entire categories of requests and acknowledgements , given the availability of that required information in a locally-stored copy of a distributed ledger .
n Data will be in one place , with one version of the truth , so that statements need not be broadcasted to multiple participants in a network , or balances held in various Nostro accounts .
n Reconciliation will be automatic for entire classes of transactions for entities using the same ledger .
Granted , this won ’ t happen immediately , and in some markets , it may only happen partially , if at all . Yet given the economic benefits unlocked by the technology , we should expect massive changes to manifest in the years to come .
In the legacy financial system , banks differentiated themselves based on how well they maintained and protected their own separate ledgers . The new , blockchain-based financial system will bring about entirely new ecosystems with immense opportunities for technology-aware organizations that can manage the transition .
New ecosystems will bring together participants , business partners , and other stakeholders across the value chain for entire industries .
Here are some possibilities for how these ecosystems may emerge .
n A central bank creates a payments ecosystem within a country , with institutions each having a subaccount on a shared ledger . A new ecosystem would emerge to support the settlement and cash management needs of enterprises . By extension , this could even extend to accounts for individuals , with the ecosystem supporting the financial planning needs of consumers .
n Government entities build blockchain ledgers for information about ownership of assets such as real estate and insurance contracts . A new ecosystem would enable rapid closing on home purchases and better management of mortgage assets for collateral , with involvement from the banks for buyer and seller , realtors , title company , insurance company , and government agencies .
n Banks involved in international remittances create accounts on a shared ledger to facilitate faster exchange of funds . As a result , they could
offer in-network remittance services at lower cost and with better foreign exchange rates .
n Vehicle data stored efficiently in a single registry would simplify processing of vehiclerelated insurance claims and better protect against fraud .
n Outside the financial industry , other applications may include digital identity systems , social services , clinical trials , and many others .
To participate in these ecosystems , your financial institution will need to be blockchainready .
One approach would be to develop blockchain interfaces for each specific network as it emerges , participating only in selected ecosystems .
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