FINTECH: DISTRIBUTED LEDGER TECHNOLOGY (DLT) TRANSFORMATION IN THE FINANCIAL MARKETPLACE OF TODAY

Today’s financial marketplace is an intricate and complex system. It involves numerous parties, varying levels of trust, and continuous flows of information. Crafted over time, the current system is reliable, efficient, and provides transparency and certainty. The financial marketplace is currently facing a modernization that aims enhance its efficiency, transparency, and reliability. Businesses have maintained transaction ledgers the method of recordation from stone to paper, from paper to a digital format (e.g. computers), and is now changing once again to a distributed ledger system. Each transition brought both improvements and impairments to the overall process. The move towards integrating DLT into today’s financial marketplace would extend traditional systems’ capabilities and offer more accuracy and security (Government Office for Science, 2016).

The purpose of this paper was to discuss and explore DLT and its impact on the financial marketplace in order to establish a more secure financial marketplace structure. Specifically, the research focused on three areas of DLT. The first area was to explore how the financial industries offering DLT-based products could best utilize the technology. In order to do so, financial market participants and regulators need to understand the technology, including current use cases as well as how it will influence current and future business models. The second area of research addressed understanding and addressing the security surrounding the technology. Specifically, the industry must consider and evaluate whether DLT can sufficiently mitigate the risk of cybersecurity vulnerabilities and whether DLT-based products are worth the potential cybersecurity threats and vulnerabilities. The third and final area of research sought to explore how DLT users could mitigate potential fraud or misuse of DLT- based products. The research herein focused on government research and industry white papers as well as industry publications and news articles. Several global entities, including governments, messaging services, and financial market participants extend resources in an effort to better understand the technology and start a conversation on how to best integrate it into our current financial marketplace and system. The target audience of this research project is those individuals attempting to better understand this technology and how it can and will affect the financial marketplace.