Financial technology: Blockchain and securities settlement

Abstract

Financial technology (FinTech) is becoming more popular in Japan (as well as
globally), and financial institutions are increasingly seeking to collaborate
with the firms providing such technology. Among FinTech, blockchain
(distributed ledger) technology is attracting particular attention because of
the possibilities it offers, most notably as a powerful new tool for
facilitating transactions. This paper provides an overview of this new
technology, including its potential contribution to the infrastructure of the
securities market, and provides an introduction to the role of blockchain in
financial transactions. This technology is innovative and improving very
rapidly. Nevertheless, any enterprise looking to adopt blockchain technology
will need to update their business processes and maintain ongoing discussion
with stakeholders. The author suggests that only 20 per cent of the barriers
to adoption are technology based, the other 80 per cent being attributable to
current business processes and business models. It is necessary to take the
time to utilise and apply blockchain technology in financial markets. It will
take more than a couple of years for blockchain technology to be fully
deployed within the financial infrastructure, but it should take less than a
decade.