Morgan Stanley Shares Roadmap for Blockchain Adoption

Morgan Stanley Shares Roadmap for Blockchain Adoption

by May 24, 2016

While the long-term opportunity offered by blockchain is clear, widespread adoption by financial institutions will take between 5 and 10 years from now, according to Morgan Stanley.

Morgan Stanley Global Insight blockchain techIn a new report entitled ‘Global Insight: Blockchain in Banking: Disruptive Threat or Tool?’, Morgan Stanley shares a timeline for blockchain adoption.

The financial services firm believes 2016-2018 will be the years during which banks and corporations will be testing use cases of blockchain. These proof-of-concept tests will be aimed at assessing if blockchain can scale and effectively reduce costs.

During the years 2017-2020, we will begin to see shared infrastructure emerge, with proven assets being adopted well beyond the initial proof-of-concept stage.

Between 2021-2025, more assets will move onto blockchain as efficiencies prove out.

Morgan Stanley's roadmap for adoption of blockchain by financial institutions

 

Use cases being explored

According to a report by Magister Advisors, financial institutions are expected to spend over US$1 billion on blockchain projects in 2017.

Among the proposed applications, blockchain technology is expected to provide greater efficiencies for post-trade settlement and change in title, but also trade finance, international payments and regulatory.

Post-trade settlement: A distributed ledger could enhance the audit function as specific securities are more easily tracked. The technology could enable all participants to see where the documents are in the sequenced approval process. Additionally, there are opportunities to shorten the settlement window which would allow for lower costs to trade.

Trade finance: Using a blockchain would allow all parties to see when the goods have been shipped and release funding appropriately.

International payments: Moving to a blockchain would shorten settlement periods, speed up transactions and reduce the risk of fraud.

Reference data: Blockchain technology could offer significant efficiencies to transactors by holding reference data for individual securities.

Regulatory: A blockchain hosting the data for regulator could be more efficient for banks assessing the data intra-firm as well as for regulators wanting to compare their regulated entities.

 

10 challenges to overcome

While blockchain technology has the potential to offer many benefits for the financial industry, there are still key hurdles to surmount before blockchain implementation becomes a reality.

Use case cost benefit: Given the high cost of building a blockchain system, an proposed use must have a position return on invested capital.

Cost mutualization: If a shared blockchain were to work like an interoperable industry utility, banks would need to share the cost of building the infrastructure, which could be a challenge.

Aligning incentives: In the case of a shared blockchain, different entities may have conflicting priorities.

Evolving to the right standards.

Maintaining scalability: A blockchain must scale effectively from proof-of-concept to succeed, a key reason why most new blockchain proposals are looking at a range of rules, including ones that restrict users or centralize all, or part, of the blockchain.

Governance: A blockchain would need a governing body to decide who can access the blockchain and who are in charge of maintenance.

Regulation: The challenge of regulating digital identities and cross-border standards would need to be addressed.

Legal risks (KYC/AML): Banks and policymakers need close control for KYC and AML issues. Finding a single digital identity passport authorizer will be key

Security: Banks will have to perform extensive research to ensure that any blockchain they implement is at least as resilient as their current infrastructure against attack.

Simplicity: Blockchain solutions need to be uncomplicated and easy to understand. They also need to interface with other parts of the parts of the technology chain seamlessly, enabling faster set-up time, training time and fixing time.

 

Featured image: Morgan Stanley in Canary Wharf by Gordon Bell, via Shutterstock.com.

19 Comments so far

Jump into a conversation
  1. 1v1 Battle
    #1 1v1 Battle 2 June, 2022, 04:16

    Thank you for sharing the Blockchain application roadmap. I understood better and grasped more specific information

  2. quordle
    #2 quordle 16 July, 2022, 03:38

    It is a good new for Blockchain Adoption. Now they can use Roadmap thanks to Morgan Stanley.

  3. drift boss
    #3 drift boss 15 November, 2022, 07:45

    In the development roadmap will encounter many difficulties as well as challenges that Blockchain Adoption have to face.

  4. nyt sudoku
    #4 nyt sudoku 30 November, 2022, 03:49

    This is a good roadmap for Blockchain Adoption. Hope it grows as planned.

  5. baldi's basics
    #5 baldi's basics 20 December, 2022, 04:24

    There are several problems and difficulties that Blockchain Adoption must overcome in the development path.

  6. contexto
    #6 contexto 2 February, 2023, 15:41

    This is a wonderful article. I’m very impressed with the information it supplied.

  7. touch
    #7 touch 13 February, 2023, 17:06

    There’s definitely a great deal to know about this topic. I love all the points you’ve made.

  8. sobranie
    #8 sobranie 13 February, 2023, 17:10

    With regularly held employee events, cigarettes online, the friendly exchange shall also be fostered aside from the working day.

  9. foodle nyt
    #9 foodle nyt 7 April, 2023, 09:03

    Great article. I’ve been checking this blog constantly and I’m impressed! Extremely useful information, especially the last part where wheel spinner made me process a lot of information. I have been looking for this information for a long time. thanks and good luck!

  10. totomargin
    #10 totomargin 19 May, 2023, 03:15

    The article is really good. I found here looking for a good article because my heart was empty. There are a lot of different articles, so reading them makes me feel a bit empty. Next time I want to read an article about, please. 토토사이트

  11. geometry dash
    #11 geometry dash 14 August, 2023, 05:34

    consumers should still consider additional factors and reviews when making purchasing decisions.

  12. pokedoku
    #12 pokedoku 30 October, 2023, 02:18

    Massive news!

  13. five nights at freddy's game
    #13 five nights at freddy's game 6 November, 2023, 09:48

    I think your idea will be copied and utilized to inspire the creation of many more ideas because it is brilliant and original.

  14. io games
    #14 io games 12 December, 2023, 09:25

    Thank you very much for writing this piece and sending it to us. We really like what you do

  15. Buckshot Roulette
    #15 Buckshot Roulette 5 January, 2024, 04:39

    This action is an encouraging sign, signaling a growing recognition of the technology’s potential in the financial sector.

  16. snaptik
    #16 snaptik 11 January, 2024, 11:50

    Your guide captures the heart and soul of Fortnite, making me appreciate every pixelated dance and epic build battle.

  17. Fnaf
    #17 Fnaf 2 February, 2024, 03:54

    I wish to acknowledge you for the valuable information that you have contributed to this post. I plan to revisit your website in the near future.

  18. drift hunters
    #18 drift hunters 15 February, 2024, 04:20

    Blockchain technology is recognized for its potential to offer efficiency gains in maintaining reference data for individual securities, streamlining processes for transactors.

  19. final grade calculator
    #19 final grade calculator 26 February, 2024, 05:12

    Thanks for the useful information from your article

Your data will be safe!Your e-mail address will not be published. Also other data will not be shared with third person.