Deutsche Bank report: Capital markets will be affected by blockchain within 6 years

According to a report by Deutsche Bank, three-quarters of participants in the capital market believe that distributed ledger technology will be widely used in the next six years.

The report, produced on behalf of the bank's Global Financial Trading business, examines the factors driving strategic thinking among institutional investors, banks, funders, sovereigns and broker-dealers.

A total of 200 market participants were surveyed, of which 87% believed that blockchain will have an impact on securities services.

Overall, 75% of respondents believe distributed ledger technology will be widely used within the next three to six years, with the report’s authors finding a “surprising certainty” about the new technology.

Deborah Thompson, head of custody and settlement at Deutsche Bank, said in the report:

“Respondents were overwhelmingly positive about the potential impact of blockchain — nearly all participants believed it would have a moderate or complete disruptive effect on existing business models — and the vast majority believed blockchain would be widely used within the next six years.”

Other key findings include that the majority of respondents believe the technology will help their company reduce significant costs.

38% of people believe that blockchain can reduce the cost of securities services by more than 20%, but most people (42%) still estimate that the cost savings can only be 11% to 12%.

And, most importantly, almost half (48%) said they believe blockchain could be most useful in preventing system failures.

Deutsche Bank has also signaled its interest in working with other large financial firms, having joined forces with others earlier this year to test how the banking industry could use digital currencies for transactions.

In August this year, the Financial Times reported that the world's four largest banks, UBS, Deutsche Bank, Santander, BNY Mellon and interbank broker ICAP, began to cooperate in the development of a new digital currency. They believe that the digital currency will become the industry standard for clearing and settling financial transactions using blockchain. They will jointly promote this concept to central banks of various countries and strive to put it into commercial use in early 2018. The cooperation of such a group of large banks is conducive to making full use of the power of decentralized computer networks and improving the efficiency of financial market operations.