DLT Could Be Game-Changer for High-Value Transactions, Says Oliver Wyman Reportby Fintech News Singapore November 15, 2023
A recent report from the Oliver Wyman Forum, presented at the Singapore Fintech Festival, discusses the significant impact of distributed ledger technology (DLT) on high-value financial transactions, such as payments and investments.
This technology, the report suggests, could potentially disrupt up to US$50 billion of annual revenue currently earned by global wholesale banks. However, it also opens up opportunities in new areas like corporate balance-sheet optimisation and asset tokenisation.
The report, “Inside The Competition For Big Money,” brought attention to how in 2021, high-value transactions in the US reached a total of US$1,441 trillion. This market, traditionally dominated by banks due to their regulated status and access to central bank systems, could see a shift in how high-value transactions could be handled with the adoption of DLT and blockchain.
Such technologies enable the creation of new monetary and asset forms, including stablecoins, central bank digital currencies (CBDCs), and tokenised bank deposits. The adoption of these innovations could offer more options for cash management and capital raising.
“Technology will complement if not challenge capital as the key source of competitive advantage, increasing the role of capital markets and nonbank institutions in financial intermediation, and reducing costs while enabling new services,”
noted Jacob Hook, the Managing Partner, Asia-Pacific from Oliver Wyman.
The report outlined several potential future scenarios for the financial industry. These include banks incorporating digital ledger technology, new entities like stablecoin issuers and DeFi platforms gaining market share, and a possible shift towards CBDCs, which would reinforce the central banks’ role in the payment system.
“Elements of all of these scenarios are likely to compete, so stakeholders in the financial system should prepare for a multi-platform, multi-money future and consider partnership models to develop capabilities,”
continued Larissa de Lima, a Senior Fellow at the Oliver Wyman Forum and co-author of the report. She also highlighted the expected intense competition for talent in this evolving sector.