ISSA and The ValueExchange study highlights growing maturity of DLT usage
19 September 2023 Canada
Image: M.Gierczyk
The International Securities Services Association (ISSA) and The ValueExchange have released a report which looks at how and where DLT and digital assets are currently taking hold in the capital markets.
The report, in association with Broadridge, is a result of a survey entitled “DLT in the Real World,” which the companies have been conducting annually since 2020.
This year’s research, with further support from Fnality and Metaco, looks at what business cases are built on, what challenges practitioners face, and where the technology is being used to deliver benefits in 2023.
The survey found that there has been a 7 per cent increase in live DLT initiatives, with 75 per cent of DLT and digital asset projects now delivering against expected returns – a marked uplift from 49 per cent in 2022.
Among these, returns are most consistent amongst five core asset classes – which look to be ready to scale in 2024 and beyond.
However, 59 per cent of respondents cite the business case as the biggest challenge in realising DLT projects, a 10 per cent increase from 2022.
As usage grows, the operational benefits of DLT and digital assets are increasingly clear – with 28 per cent of DLT projects being run with cost efficiencies as their key driver in 2023 (above new product revenues).
Despite increasing DLT volumes in securities finance and cash funding, only 9 per cent of projects are currently driven by potential liquidity and balance sheet improvements – highlighting a major area of opportunity.
Possibly linked to this liquidity point, 50 per cent of asset owners see DLT as less relevant to their businesses than the previous year.
The survey includes insights from more than 350 teams and departments across global capital markets.
Colin Parry, CEO of ISSA, comments: “The ISSA DLT Working Group has been at the forefront of the digital asset journey to help the securities industry understand the latest trends and what to expect in the future.
“We first partnered with the ValueExchange to create an industry survey to track the real world evolution of DLT and digital assets from the perspective of the market. We are very excited to be publishing, for our fourth year running, what has become the one survey that creates the DLT discussion in securities services.”
Barnaby Nelson, CEO of the ValueExchange, says: “These results reflect the maturing of DLT, that industry efforts are stabilising and strengthening year on year. We are clearer on which asset classes drive real benefits today and, despite the challenges of 2022, the industry is more committed to the DLT journey than ever.
“We are also clear on what we need to do now to accelerate the benefits of DLT at scale – driving innovation in digital cash, enabling much more interoperability of platforms, and engaging much more actively across our firms as we execute on our DLT projects.”
Horacio Barakat, head of digital innovation at Broadridge, adds: “Distributed ledger technology is transforming global repo market infrastructure. We are empowering leading financial institutions with the ability to dramatically increase liquidity while lowering risk and operating costs.”
The report, in association with Broadridge, is a result of a survey entitled “DLT in the Real World,” which the companies have been conducting annually since 2020.
This year’s research, with further support from Fnality and Metaco, looks at what business cases are built on, what challenges practitioners face, and where the technology is being used to deliver benefits in 2023.
The survey found that there has been a 7 per cent increase in live DLT initiatives, with 75 per cent of DLT and digital asset projects now delivering against expected returns – a marked uplift from 49 per cent in 2022.
Among these, returns are most consistent amongst five core asset classes – which look to be ready to scale in 2024 and beyond.
However, 59 per cent of respondents cite the business case as the biggest challenge in realising DLT projects, a 10 per cent increase from 2022.
As usage grows, the operational benefits of DLT and digital assets are increasingly clear – with 28 per cent of DLT projects being run with cost efficiencies as their key driver in 2023 (above new product revenues).
Despite increasing DLT volumes in securities finance and cash funding, only 9 per cent of projects are currently driven by potential liquidity and balance sheet improvements – highlighting a major area of opportunity.
Possibly linked to this liquidity point, 50 per cent of asset owners see DLT as less relevant to their businesses than the previous year.
The survey includes insights from more than 350 teams and departments across global capital markets.
Colin Parry, CEO of ISSA, comments: “The ISSA DLT Working Group has been at the forefront of the digital asset journey to help the securities industry understand the latest trends and what to expect in the future.
“We first partnered with the ValueExchange to create an industry survey to track the real world evolution of DLT and digital assets from the perspective of the market. We are very excited to be publishing, for our fourth year running, what has become the one survey that creates the DLT discussion in securities services.”
Barnaby Nelson, CEO of the ValueExchange, says: “These results reflect the maturing of DLT, that industry efforts are stabilising and strengthening year on year. We are clearer on which asset classes drive real benefits today and, despite the challenges of 2022, the industry is more committed to the DLT journey than ever.
“We are also clear on what we need to do now to accelerate the benefits of DLT at scale – driving innovation in digital cash, enabling much more interoperability of platforms, and engaging much more actively across our firms as we execute on our DLT projects.”
Horacio Barakat, head of digital innovation at Broadridge, adds: “Distributed ledger technology is transforming global repo market infrastructure. We are empowering leading financial institutions with the ability to dramatically increase liquidity while lowering risk and operating costs.”
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