Australia’s financial institutions are uniquely placed to drive the adoption of blockchain technology, but it won’t be the panacea some are hoping for, says Deloitte.
A new report, produced by Deloitte with the World Economic Forum and titled The future of financial infrastructure, found that distributed ledger technology (DLT), popularly known as ‘blockchain’, has “great potential to drive simplicity and efficiency” through the creation of new infrastructure and processes.
DLT, however, will be only one of many technologies that will form the foundation of a next-generation financial services infrastructure, the report stated.
“The most [effective] DLT applications will require deep collaboration between incumbents, innovators and regulators, adding complexity and delaying implementation,” said the report.
“New financial services infrastructure built on DLT will redraw processes and call into question orthodoxies that are foundational to today’s business models."
Deloitte Australia's national lead for payments advisory, Richard Miller, said Australian firms have a number of “unique characteristics” that suit them to driving the development of DLT.
“We have a stable and mature government and banking sector with existing strong connectivity between major competitors,” Mr Miller said.
Furthermore, Australia could benefit from its relatively uncompetitive banking landscape in that major players will be able to move faster, he said.
“Our banks are fairly progressive in their internal efforts, making investments globally, understanding the technologies locally and developing their skills with highly advanced user technology,” Mr Miller said.
“The regulatory system is sound and progressive, as regulators are quite supportive of blockchain and digital identity because it brings additional transparency into transactions."