Smart Contracts in Financial Services: Getting from Hype ...

Smart Contracts in Financial Services: Getting from Hype to Reality2 Executive SummaryThe potential of Smart Contracts programmable Contracts that automatically execute when pre-defined conditions are met is the subject of much debate and discussion in the Financial services industry. Smart Contracts , enabled by blockchain or distributed ledgers, have been held up as a cure for many of the problems associated with traditional Financial Contracts , which are simply not geared up for the digital age. Reliance on physical documents leads to delays, inefficiencies and increases exposure to errors and fraud. Financial intermediaries, while providing interoperability for the finance system and reducing risk, create overhead costs for and increase compliance requirements. In this report, we aim to cut through the speculation and hype around the potential of Smart Contracts .

and also leverage reduced operational costs and new business models in the long run.”8 Inefficient and opaque processes entrap market participants and lock up capital. For example, investors committed $1.2 billion in October 2013 to fund a loan for a junk-rated firm. They did not receive any interest for 10 months9. This example reflects

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  Getting, Leverage

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