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.
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