Culture changes required before blockchain 18 October 2017Toronto Reporter: Stephanie Palmer
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Blockchain could lead to cost savings in the back office, but cultural change and collaboration are required before the technology can be fully implemented, heard attendees at Sibos 2017 in Toronto.
In a session on blockchain use cases in securities markets, HSBC’s John van Verre named corporate actions as an example of an area in which blockchain could have a significant impact, as it’s a very manual process with a lot of separate steps and duplication of efforts.
Creating a solution that captures the information once and makes it available to many would have “enormous economies of scale”, he said.
However, implementing blockchain will require participants to give up their own processes and become part of the ecosystem, and so the move will be a more significant cultural change than technology change.
Conference moderator Jean-Philippe Vergne agreed that widespread implementation of blockchain will be “a cultural and organisational issue”, requiring industry cooperation.
From a central securities depository (CSD) perspective, Sergey Putyatinskiy of Russia’s National Settlement Depository, said that while blockchain has the potential to reduce risk, CSDs need to understand the technology they’re using.
All institutions also need support from their central banks and regulators in order to create anything so drastically different, as well as support from senior management internally.
Bernie Kennedy of HKEX added that the technology has to be capable and proven for market infrastructures.
Market infrastructures’ technology is old, but “does what it says on the tin”. However, infrastructures have to reduce costs somehow, and this could include finding any areas in which blockchain could add real value.
Equally, infrastructures working together could have the power to drive change, creating a network effect, she said.
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