Some financial companies have abandoned their blockchain pilots as they were not satisfied with the results. However, they still have faith in the potential of the technology.
Several blockchain pilots initiated by well-known financial companies were not convincing enough to be kept going, Reuters has discovered. The cases under examination involved test projects launched by the Depository Trust & Clearing Corporation (DTCC), BNP Paribas, and SIX Group. Even though blockchain is advertised as the best technology for transactions and settlements, some companies have abandoned exploring it, at least for now.
Wall Street institutions enthusiastically embraced the blockchain hype, hoping to find the ideal technology to speed up processes and cut costs. Even cryptocurrency skeptics were convinced that blockchain could not fail as an independent technology. However, this is not apparently the case as some financial companies were not really impressed with the results.
Reuters found that some institutions abandoned their pilot projects for different reasons, among them the expenses associated with moving to a blockchain-based infrastructure.
DTCC was forced to ditch a blockchain pilot project meant to handle the clearing and settlement of repurchase agreement transactions. Murray Pozmanter, who leads DTCC’s clearing agency services, said the project was paused because banks and financial institutions found the technology was not delivering any savings and traditional approaches were actually much cheaper.
“Basically, it became a solution in search of a problem,”Pozmanter said.
SIX Securities Services, which offers post-trade solutions and runs Switzerland’s stock exchange (SIX Swiss Exchange), has also given up on further blockchain-based developments. It is now left only with a blockchain prototype created byDigital Asset Holdings. SIX spokesperson Jürg Schneider said:
“We wanted to go into another direction.”
BNP Paribas announced two years ago that its securities services branch had partnered with several startups to create a blockchain platform for small enterprises to handle their securities. The French bank abandoned that project but didn’t fully give up on blockchain. It launched another blockchain initiative referred to as LiquidShare, a source familiar with the situation revealed.
“Creating an enterprise-wide robust blockchain platform requires the full cooperation of the whole post trade ecosystem,”the source noted.
Despite the challenges encountered, the financial companies still believe in blockchain’s potential.
Pozmanter revealed that DTCC was still exploring the technology for a project with Digital Asset Holdings.
“We’re still bullish on the technology,”he said.
Source: Read Full Article