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Transforming Southeast Asia's investment banking landscape with blockchain technology

Owen Jelf & Chin Wei Min, Accenture | Dec. 9, 2015
It is in its early days, but the technology that makes Bitcoin work has the potential to transform Southeast Asia's investment banking landscape.

However, regulators have yet to come to terms with the existence of blockchain. But given its transparency and economic democracy, it is inevitable they will embrace it. Meanwhile, we see an intermediary stage of investment banks running private (permissioned) blockchain solutions. This is until regulation or legislation catches up to the blockchains, where capital markets players are confident in the types of services they can offer on a public (permissionless) blockchain.

An example of the effect of blockchain solutions is digital wallets and exchanges interacting externally. The initial impact will likely be related to asset classes where there is no central trading and/or clearing mechanism, such as FICC derivatives, syndicated loans, and private investments.

Ultimately, the ability to settle currency, equity, and fixed income trades almost instantaneously through permissioned distributed ledgers could create an even greater opportunity for banks to drive efficiency and potentially create new asset classes.

The other near-term impact of blockchain technology adoption for distribute ledgers will likely be the adoption of smart contracts as counterparties agree on contractual terms via computer protocols as many contractual clauses could be automated and security enhanced.

From Accenture's vantage point, ASEAN regulators need to understand that the maturing blockchain landscape has the opportunity to be a tremendous source of innovation which requires further due diligence to define industry standards for settlement and counterparty risks.

Accenture favours regulation at the entry/exit points of cryptocurrency networks (digital currency wallets and digital currency trading exchanges) in a way that secures transactions but does not stifle innovation. We believe an agile approach that allows for regulatory evolution in parallel to maturing innovation will be key to maintaining the balance between security and future mass market blockchain scalability.

Owen Jelf is global managing director of Accenture's capital markets practice and Chin Wei Min is managing director and lead of Accenture's Asia-Pacific capital markets business.


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