A blockchain, as an implementation of Distributed Ledger Technology (DLT) is, in simple terms, a decentralised database of transactions verified by a cryptographic signature.
Public DLT implementations often cause polarising views in financial services. High compute, complexity and low standardisation are perceived as inhibitors to broad-scale adoption.
“Capital markets will need to be on a private DLT to meet AML requirements,” according to the Head of FinTech for an operational risk consultancy. “Interoperability is the key, there is no standard for how Etherium, R3 and Hyper Ledger should link together.”
A new, private and authenticated DLT solution is starting to emerge for quality leaders at financial firms.
If the promise of public DLT was as a solution to the counterparty trust issue, then private DLT enables firms to focus on the problem of data synchronization.
“DLT is a form of API,” stated a C-level executive for a European Insurance major. “Private DLT can reduce the risk of error in bulk policy verification, authenticating a batch of transactions in minutes, not months.”
Firms such as the Australian Stock Exchange, BNP Paribas, Commerzbank, Standard Chartered and Bank of America are investigating the API opportunities for private DLT. Some tier 1 institutions have setup incubators to investigate associated regulatory possibilities.
But to grasp the true opportunity, firms must drive DLT and AI led transformation cohesively.
QA Vector® Research, in regular conversations with financial infrastructure firms, finds that though 70% plan to embed AI in QA, fewer than 10% expect to integrate these transformations into DLT-led process redesign.
To grasp the promise of private DLT, quality leaders at financial infrastructure firms should plan for a distributed testing model, enabled by AI driven predictive risk assessment.
In taking this enterprise view of QA, firms will be better able to implement mission-critical assurance and improve overall software performance. Download delivering quality for financial infrastructure firms to learn more.
