Celent: Cross-Border Payments Most Mature Use Case for Distributed Ledger Technology

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The impact of distributed ledger technology on the financial services industry is only growing over time. Image: Shutterstock

Research and consulting firm Celent recently published a report on exploring distributed ledger technology (DLT) use cases in capital markets and corporate banking.

Titled “Beyond the Buzz,” Celent partnered with Misys financial software to take a closer look at blockchain solutions, asking three key research questions:

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Source: Celent

The report cites interoperability, “not only with legacy technology infrastructure but also among DLT networks,” as the critical need propelling fintech innovation. Celent finds that interoperability will enhance the notion of network effects so that solutions, such as the Interledger Protocol, “can be implemented quickly and seamlessly by all stakeholders to maximize liquidity while also minimizing operational risk of transition.”

Celent states that DLT’s main benefits in financial services include dramatic cost and lead-time reduction due to real-time settlement and increased transparency. The report outlines several corporate banking use cases for DLT, of which cross-border payments was noted as the most mature.

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Source: Celent

The research firm highlights Ripple as an example of distributed ledger technology for cross-border payments that uses the consensus process to settle transactions. It references our whitepaper, The Cost-Cutting Case for Banks, to explain that Ripple’s DLT solution can enable banks to save up to 33% on costs related to international payment volumes.

“As a sector largely driven by transaction processing, distributed ledger technology has the potential to greatly improve corporate banking services,” says Patricia Hines, senior analyst with Celent’s Banking Group and coauthor of the report. “With the promise to improve visibility, lessen friction, automate reconciliation, and shorten cycle times, corporate banking use cases have attracted significant attention and investment.”

Celent’s report joins a slew of other research that demonstrates that distributed ledger technology has evolved beyond the buzz and that Ripple is leading the way to significantly improve cross-border payments and open new revenue opportunities in corporate banking.

Read the full report here.