In recent months there has been an increasing number of financial institutions experimenting with blockchain technology, according to Pearl Imbach, BD Lead for Financial Institutions at Matter Labs.
She said the most prominent use cases and benefits are tokenization, automating workflows using smart contracts and enhancing global interoperability.
“The choice is almost always between a private blockchain, ensuring a permissioned environment, and a public Layer 1, allowing for interoperability and enhanced liquidity, most often the battle-tested Ethereum for its security, decentralization, and smart contract capabilities,” she said.
“However, now there are options to have the best of both worlds: privacy and customization of your own app chain while enjoying the benefits of operating on a public network,” she added.
On Wednesday, November 15, Matter Labs and a management consultancy Oliver Wyman, released a report that provides deep insights into the feasibility of public and private blockchain infrastructure for the financial services industry.
The report titled, All Roads Lead to Rome, examines the evolving public and private blockchain landscape, and provides insights into the technological infrastructure, the sector’s challenges in terms of scalability, privacy and interoperability, and the innovative solutions developed over time for making blockchain integration into financial services impactful.
“Our report explains more recent developments in blockchain technology and how they can unlock the future of on-chain finance,” commented Imbach.
The report is inspired by the old adage, “All Roads Lead to Rome,” as the city ultimately served as a nexus of connectivity and commerce linked by a sophisticated network of roads.
In the blockchain universe, both public and private domains reflect these foundational pathways, said Imbach.
Though each brings unique challenges akin to different terrains, they all converge towards a shared vision: an interoperable and scalable ecosystem.
Towards this vision, public and private blockchains serve different purposes today and offer distinct solutions to safeguarding privacy and enabling interoperability.
Those financial institutions investing in blockchain and working on their infrastructure decisions can integrate the insights from this report, especially the articulation of the merits and constraints of various public and private blockchain solutions, into their assessment along with institution-specific roadmaps, preferences, constraints and risk parameters.
Ugur Koyluoglu, Partner and Global Head of Digital Assets at Oliver Wyman said there is still a lot of work ahead for the financial services industry.
“Potential mass adoption with interoperable and scalable blockchains hinges on at least six essential advancements: enhanced privacy, digital identity management, prudent security, balanced governance structures, compatible protocols, and appropriate regulations,” he said.
“In addition to the industry participants, regulators and public policy makers have to deepen their understanding of blockchain to foster innovation within safe-rails,” he added.