BLOCKCHAIN BEYOND BITCOIN

NEW KID ON THE BLOCK Transfer of value in

HOW BLOCKCHAIN TECHNOLOGY IS SET TO TRANSFORM FINANCIAL SERVICES very large and very
small increments without
an intermediary will
Verifiable and dramatically
robust identities, reduce the cost and
cryptographically speed of payments
secured

Distributed ledger Payment mechanism
will make audit and AUTHENTICATING MOVING VALUE combined with a reliable,
financial reporting real- IDENTITY AND VALUE PAYMENTS, TRANSFERS safe store of value
time, responsive and AND PURCHASES reduces the need for
transparent, improving typical financial services;
the ability of regulators savings and current
to scruntinise corporate accounts will become
financial actions obsolete
ACCOUNTING STORING VALUE
FOR VALUE FINANCIAL ASSETS SUCH
NEW CORPORATE AS CURRENCIES
GOVERNANCE AND COMMODITIES

Debt can be issued,

Reputational systems en- traded and settled on the
able insurers to estimate blockchain, increasing
actuarial risk better, cre- efficiency and improving
ating decentralised mar- systemic risk; consumers
POTENTIAL IMPACT
kets for insurance can use reputation to
OF BLOCKCHAIN
access loans from peers
INSURING VALUE LENDING VALUE
AND MANAGING RISK CREDIT, MORTGAGES,
BONDS

New models for peer-to- New models for P2P fi-

peer (P2P) financing, and nancing and recording of
FUNDING AND EXCHANGING VALUE
recording of corporate corporate actions such
INVESTING IN ASSETS SPECULATING, HEDGING
actions such as dividends AND ARBITRAGING as dividends paid auto-
paid automatically matically through smart
through smart contracts contracts

Source: Blockchain Revolution, Tapscott/Tapscott

WHAT BLOCKCHAIN ADOPTION COULD LOOK LIKE

2015 2016-2017 2018-2024

EXPLORATION EARLY GROWTH
AND DEVELOPMENT ADOPTION

Initial capability Leading banks see Banks begin to see

and use-case as- the value and be- the benefits expe-
sessments gin deployments rienced by early
for asset classes adopters and,
Early adoption bilaterally traded combined with 2025
likely for and/or have no regulatory guid- MATURITY
internal central clearing ance and certain-
reconciliation authority ty, the network Blockchain
effect takes hold adoption is
Regulatory cer- considered
tainty drives adop- New service mainstream and
tion for external providers and integral to the
uses models emerge capital markets
ecosystem
Regulatory au- Deployments go
thorities realise viral across numer-
the benefits for
ous asset classes
auditing and com-
pliance; rule-mak- New products/ser-
ing begins vices are created;
incumbent pro-
cesses/services are
discarded

Source: Accenture

CENTRALISED OR DISTRIBUTED LEDGER? VENTURE CAPITAL FUNDING IN

A DISTRIBUTED LEDGER IS A NETWORK THAT RECORDS OWNERSHIP THROUGH A SHARED REGISTRY BITCOIN/BLOCKCHAIN TECHNOLOGIES
($M)
CENTRALISED LEDGER DISTRIBUTED LEDGER

2012 2.13

2013 95.05

2014 361.53

CLEARING 2015 690.18

HOUSE

Source: CoinDesk

ESTIMATED CAPITAL MARKETS

SPENDING ON BLOCKCHAIN
TECHNOLOGY ($M)

2014 30
10 KEY HURDLES TO ADOPTING BLOCKCHAIN IN FINANCIAL SERVICES
HURDLE Economics Technology Co-operation Policy
2015 75
USE-CASE COST/BENEFIT

COST MUTUALISATION

ALIGNING INCENTIVES
2016 130

EVOLVING TO RIGHT STANDARD

SCALABILITY/PERFORMANCE 2017 210

GOVERNANCE

REGULATION 2018 315

LEGAL RISKS

SECURITY
2019 400
SIMPLICITY

Source: Morgan Stanley 2016 Source: Aite Group

FINANCIAL TRANSACTION SETTLEMENT TIME (DAYS) GREATEST OPPORTUNITY FOR DISRUPTION IN UK FINTECH
SETTLEMENT DAYS SURVEY OF FINTECH FOUNDERS AND INVESTORS

0 1 2 3 5 10 20
6% 37%
CORPORATE BONDS Alternative Infrastructure (blockchain/
lending API)

OTC DERIVATIVES *

EQUITIES 15% 22%

Weath Payments
management/
SYNDICATED LOANS advice

PRIVATE DEBT
INSTRUMENTS
20%
Insurance
Current state Blockchain
*ISDA best
practice guidelines
Source: Accenture Source: Silicon Valley Bank 2015