SWIFT and Accenture Identify Key Factors for Blockchain Tech Wide Adoption

SWIFT and Accenture Identify Key Factors for Blockchain Tech Wide Adoption

by May 19, 2016
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Although blockchain holds many promises for the financial services industry, the technology will need to overcome many challenges before reaching wide adoption, according to a new paper by SWIFT and Accenture.

SWIFT Accenture position paper distributed ledger techThe paper, which aims at formalizing SWIFT’s position on distributed ledger technologies, highlights eight key requirements in order for the technology to fulfill the needs of the financial community:

Strong governance, with clearly defined roles and responsibilities of the parties involved;

Data controls in terms of access and availability to preserve confidentiality;

Compliance with regulatory requirements;

Standardization at all levels to guarantee straight-through processing, interoperability and backward compatibility;

Identity framework to ensure accountability and non-repudiation of financial transactions;

Security and cyber defense to detect, prevent and resist cyber-attacks;

Reliability to support mission-critical financial services; and

Scalability to support services which process hundreds or thousands of transactions per second.

Requirements for blockchain wide adoption SWIFT Accenture report

It argues that significant research and development (R&D) work is required before distributed ledger technologies can be applied at the scale required for the financial industry.

“While there are promising developments in each of these requirements, significant extra R&D work is needed in all these domains before distributed ledger technology (DLT) can be applied at the scale required by the financial industry,” the report says.

“Despite the emergence of new solution providers, and the natural maturation of existing software, there is no single mature DLT solution yet on the market that addresses all the requirements necessary for an enterprise grade implementation, with many questions remaining unanswered.

“As such, DLTs are at an early stage in their development.”

As the financial services industry is “moving from an educational phase, into an application phase,” it is primordial to understand that blockchain technology “will not be a silver bullet to solve all business issues.”

“Potential use cases should always be assessed to determine whether or not the key strengths of the technology could combine to resolve the business issue in question,” the report says.

 

Key strengths of distributed ledgers

The document further details the benefits and opportunities offered by blockchain technology.

These include the ability to create:

Trust in a disseminated system as participants can trust the authenticity of the date on the distributed ledger without the need of a central body;

Efficiency in broadcasting information: Distributed up-to-date ledgers allow the latest data to be updated and replicated in close to real time;

Complete traceability of transactions as participants can trace information flows back through the entire chain. Entries can be added to, but not deleted from the distributed ledger, making ledger information immutable;

Simplified reconciliation: Local access to complete and verified data could ease reconciliation processes;

Distributed ledgers operate seamlessly and removes dependency on a central infrastructure for service availability allowing for very strong built-in data resiliency.

SWIFT has been involved in a number of blockchain initiatives. The cooperative is both a founding member and board member of the Linux Foundation’s Hyperledger Project, an open source initiative aimed at advancing distributed ledger technologies.

SWIFT Innovation Labs are currently working on a number of blockchain-related proofs of concept including a platform for identity and access management and a Standing Settlement Instruction database for OTC markets.

 

Get the full report: https://www.swift.com/insights/press-releases/swift-and-accenture-outline-path-to-distributed-ledger-technology-adoption-within-financial-services

 

Featured image: Information Technology Digital Network Concept by Rawpixel.com, via Shutterstock.com.

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