A new report shows that distributed ledger technology can clear away the debris of the payments industry. Image: Shutterstock
Consumers and corporates want the same level of on-demand real-time payment service they’ve come to expect from all other services they use, but banks still face significant challenges in meeting that demand.
This is the central issue addressed by a new report titled “Distributed Ledger Technology: Clearing Away the Debris?” from the Whitechapel Think Tank, of which Ripple is a member and participant.
The report, conceived as a proposal from HSBC, focuses on the U.K. payments system as a high-functioning example of the best-case scenario for the deployment of distributed ledger technology (DLT).
The Whitechapel report evaluated several operational pain points within the current payments industry in order to identify which of these challenges could see the most significant improvement from implementing DLT.
After a comprehensive review, Whitechapel found that each of the most applicable use cases for DLT fell within one of four categories:
- Reference data: The more information that is shared through DLT, the more likely that money-laundering, fraud and other financial crime can be identified and prevented.
- Identity management: DLT can assist with Know Your Customer (KYC) verification, reducing delays for customers and resulting in higher success rates in pinpointing high-risk customers and transactions.
- Settlement: Market settlement is listed as “one of the most documented applications in DLT,” and correspondent banking is highlighted as a particular area for improving settlement.
- Internal bank processes: With DLT, banks can link all applications so that they and their customers can track payment status in real time.
Cross-border payments are rife with high costs, long time delays and customer frustrations; Whitechapel confirms that updating the payments infrastructure with distributed ledger technology will ultimately make sending money around the world more efficient.
View the entire report here.