Corporate America Recognizes the Business Value of the Technology
Billboard magazine says, “Blockchain offers solutions to previously intractable problems, such as song rights monitoring and reliable distribution of royalties and event tickets.
This illustrates the breadth of acknowledgement regarding blockchain technology and digital assets. Indeed, 90% of the world’s banks are testing blockchain applications, says Bitpress.com. Blockchain is expected to cut bank infrastructure costs by 30%, saving $12 billion a year, according to DMR Business Statistics, while PwC says 82% of financial companies expect to develop FinTech partnerships in the next three years.
How profound is this technology? It’s “the most important innovation since the magnetic strip,” says Jason Oxman, former CEO of the Electronic Transactions Association.
Goldman Sachs, August 2020: Mathew McDermott, global head of digital assets says, “In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain. So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”
Nasdaq agrees, saying, “Blockchain technology holds great promise in allowing capital markets to operate more efficiently with greater transparency and security,” reports The Wall Street Journal.
Indeed, stock exchanges in Australia, Switzerland and Singapore plan to replace clearing and settlement platforms with blockchain in 2021.
And no one is moving faster in this area than Vanguard, the $6.2 trillion mutual fund company. Vanguard plans to transact FX trades on a blockchain in Q3 2020, settling trades instantly instead of the 2-3 days required by current procedures. State Street, BNY Mellon and Franklin Templeton participated in Vanguard’s successful Q2 2020 test involving Asset-Backed Securities.
“Vanguard is dedicated to providing innovative, world-class solutions that help advance the financial services industry,” says Warren Pennington, principal and head of Vanguard’s investment management fintech strategies group. “By digitizing and streamlining the ABS issuance process, we will be able to increase the speed and transparency of transactions while reducing costs and minimizing exposure to risk, which ultimately leads to a more efficient business model for future generations of capital market activity.”
Vanguard has been leveraging blockchain technology since 2017, and in 2019 applied the technology to one of its index funds, which has $1.3 trillion in assets. Vanguard says blockchain technology can track benchmarks more accurately, settle trades more quickly, increase transparency and alleviate liquidity concerns – all while lowering costs for clients.
For these reasons and more, Goldman Sachs says blockchain technology will add $37 billion to the U.S. economy by 2021.