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DLT: clearing away the payments debris?

02 November 2016  |  7541 views  |  2 Group of arrows with one odd pointing other direction

Distributed ledger technology has the potential to ease a host of operational pain points with UK payment systems and could be particularly useful for reference data databases, a report from Whitechapel Think Tank (WTT) suggests.

The report finds that DLT can transform the efficiency of specific operational pain points within payment processing, with each of the most applicable use cases falling within one of four categories: reference data, identity management, settlement and internal bank processes.

On reference data, WTT says the industry should investigate the use of DLT in two specific areas: the UK's Extended Industry Sort Code Database payments reference data database, and a central sanctions register database.

Meanwhile, the report notes the UK's Payment Strategy Forum's flagging of financial crime intelligence sharing and KYC verification as problematic areas. A permissioned distributed ledger could, it is suggested, be a good way to produce and maintain blacklists for AML obligations.

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. While for internal bank processes, DLT is floated as a way that banks can link all applications so that they and their customers can track payment status in real time.

Read the full report here: » Download the document now 239.8 kb (PDF File)

Comments: (2)

Mark Burlison
Mark Burlison - Icon Solutions Ltd - London | 03 November, 2016, 09:14

What problem with the EISCD does DLT solve?

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John Wright
John Wright - Vocalink Limited - London | 04 November, 2016, 15:21

Hi Mark

The main one I can think of is EISCD is deeply unsexy.  DLT might give it some alure.

Seriously though, currently all changes to EISCD are done via Bacs, which is effectively custodian of the whole register.  If it were to be divided up in a hiearchical way - say each bank had "ownership" of its own subset - they could all maintain their own piece of the jigsaw and with DLT there would no longer need to be a single central source of the truth.

Is this solving a real-world problem?  depends on your point of view I suppose?

Would anybody pay to have it fixed with DLT?  I don't have a budget so I'm not qualified to say, but I doubt its near the top of anybody's list.

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