blockchain finance experts in boston

blockchain finance experts in boston

The Role of Blockchain Technology in Financial Services: Insights from Boston Experts

1. Introduction to Blockchain Technology

Over the course of a very short period of time, blockchain technology has moved from an academic concept to a technology embraced by one of the leading financial services ecosystems in the U.S. This interest by commercial interests as well as policymakers has been driven by the potential of blockchain technology to lower the cost of financial services while simultaneously increasing the speed and accuracy of supply chains. These operational improvements have the potential to create significant financial and societal value.

Despite the potential for blockchain technology to create massive value, the technology also presents myriad challenges to full deployment. These challenges include technical and security issues as well as public policy and regulatory issues. In order to deploy blockchain technology in a safe and secure way that captures both the financial and societal benefits, a complexity of expertise including technologists, lawyers, security experts, business experts, and compliance experts will be required.

2. Applications of Blockchain in Financial Services

Many financial service firms are already incorporating blockchain (or distributed ledger) technology into their products. Blockchain has the potential to greatly improve speed and efficiency when conducting certain financial transactions. One popular use case is international trade finance solutions, like IBM’s new offerings for customers of the Hyperledger Fabric, a blockchain framework hosted by the Linux Foundation. Deloitte, EY, and other multinational advisory firms are developing new blockchain solutions for many financial services firms. R3 (the largest independent company supporting blockchain for financial markets) recently closed the industry’s largest ever investment for blockchain technology.

Many financial service firms are looking into blockchain as a potential solution for a variety of finance challenges. Many financial service firms have internal teams experimenting with blockchain technology. These teams are building prototypes to help them identify key use cases, assess the feasibility of implementing or modifying a blockchain infrastructure, and identify new revenue streams that could evolve from identifying potential blockchain solutions. Although most of the early industry blockchain experiments failed, the work completed has provided important insights into the capabilities and limitations of the technology. These insights help eliminate oversights that may have occurred during design phases, and to refine approaches with realistic analytical models for decision making.

3. Expert Perspectives from Boston

Our research in Boston indicates that blockchain is no longer just the realm of technology and development labs, but is now a truly cross-functional domain. Experts more commonly discussed analytics and business process reconfiguration (generic business investments) more often compared to initial insights (cryptocurrency architecture and use-case development). The banking and financial services experts we interviewed highlighted several core cases, including trade confirmations, interbank settlement, debt and equity issuance, and cross-border commercial payments in their consideration and detailed assessments of blockchain technologies for reconfigurable and distributable transaction processes. Overall, blockchain is something which is a must-do yet avoidable at any financial services institution.

In Section 4, we detail several distinct layers of concept and technology which underpin a distributed ledger technology evolution, specifically identifying perceived key benefits, ROI considerations, and ongoing work practices at large investment banks, exchanges, and insurance firms we engaged with in our data collection. In Section 5, next steps, we provide a synthesis for consideration, with references to other emerging business and societal issues within innovation and engineering literature and business model logic and blockchain technology impacts that can contribute in useful ways to enhance and enable responsible and sustainable industry evolution.

4. Challenges and Opportunities in Implementing Blockchain in Finance

The opportunity in financial services is huge. The cost of trust is enormous when dealing with intermediaries. There are huge opportunities, but we cannot ignore the fact that there are huge challenges as well. FSI face multiple challenges including legacy infrastructures, not to mention regulatory policy and support of stakeholders. Government and regulatory institutions want to preserve the economy and prevent social disruption. Having one stakeholder eager to try out an innovative technology is all well and good, but having many suppliers and customers as potential users who have their own requirements and choices in alignment will be critical.

Both those who adopt the technology and those who wish to adopt the technology must work closely with regulators. Regulation is often seen as an enemy through making adoption very long and difficult. Finally, we have to understand that building new payment mechanisms on-the-fly is not something we will be able to do, and the trust that we build taking over the existing financial system is justified in carrying out those daily payments. While blockchain technologies provide an opportunity for financial gatherings to create new ways of trading and making payments, setting out on that journey is not something that is going to serve up overnight. We cannot ignore or bypass the existing market participants, because no matter how effective we think we can make this new social technology, we still need to ensure the trust, especially now that the payment of orders of magnitude reaches more and more.

5. Future Trends and Innovations in Blockchain Finance

Interest rate swaps on blockchain: Swaps are a worldwide integral part of financial markets, and they are one of the first types of OTC derivative instruments to enact and evaluate. Each figure of a swap has a money flow which might contain an exchange between two currencies, an exchange between a fixed rate and a floating rate or just coupon payments. This study is supposed to decide the most remarkable and possibly the smallest cost for a form of connection that can be typically executed over a blockchain with something similar to an SWIFT-like technology. The results illustrate the decreasing of the swap correlation cost since the implementations are time shifted through the spreadsheet, and we found out that this work could be extended to evaluate for the market impact on the blockchain platform for trading. It is clear that a reasonable save in coordination costs cannot be at the service of covering unreasonable gaps in the choice of the technology.

Off-chain payment channels: The transaction throughput and the average network delay in the public blockchain setting would not scale to the level required to support diverse enterprise transactions. Off-chain payment channels or bill blockchain are one type of technology that supports eliminating these drawbacks and a few of the particular benefits and specific challenges associated with it. The payment channel networks are basically believed to connect peers in an industry and significant hybrids to import payments off-chain, but just these channels are homogeneous goods supporting a simple design.