Simplifying and accelerating access to digital assets marketplace
The digital transformation of the financial services industry has been gaining momentum over the last decade, but as the era of Banking and Finance 4.X evolves, there is a growing demand to access a full spectrum of hybrid and digital services. And a MultiHub model could be the way forward.
The lay of the land
Right now, we know that the adoption of cloud, and specifically a cloud-based consumption/utility model, can reduce costs and scale up or down, as required, giving financial firms such as banks, asset managers and exchanges the two things they most urgently need: resilience and agility.
But, we’ve also seen that there are challenges to becoming a cloud-first enterprise – and potential pitfalls if the implementation goes wrong. From regulatory hurdles and ESG scrutiny from customers, to internal governance issues and skill gaps, it’s risky to jump headfirst into a cloud transformation, without a clear-headed strategy to guide the journey.
The numbers provide robust evidence for a comprehensive, holistic development and release strategy. According to McKinsey: a sound DevOps and release-management strategy can contribute to a 25 – 30 percent increase in capacity creation, a reduction in time to market of 50 – 75 percent, and more than a 50 percent reduction in failure rates.
In turn, development efforts can improve schedule adherence by 1.5 times and reduce customer defects by 20 – 30 percent through process automation and agile ways of working, and leading organizations have improved issue-resolution time and planning time by between 30 – 50 percent.
The numbers could go on forever, but the reality is that with new market entrants in fintech rapidly taking ground from incumbent financial players, those who don’t wish to be left behind need to act now.
The twin pillars of digital success: interoperability and time-to-market
Financial services firms increasingly need to gain fast and seamless access to digital assets – just like everyone else. Indeed, according to a new Fidelity report1, 84% of US and European institutional investors want to purchase investment products that hold digital assets.
Moreover, in the US, investors favour accessing these products through traditional financial firms, so there’s a huge opportunity in offering them.
But, all these new assets exist on digital platforms. And yes, the financial services sector has – and is – embracing digital technologies. But there are still interoperability and speed problems, as well as a lack of standards. It’s no trivial feat to reconcile cloud-based public blockchains with your high-speed private ledgers and traditional infrastructure.
As we know, speed, flexibility, scalability, reliability and security are keys to success. And so too is the ability of IT systems to exchange and make use of information efficiently and cost effectively. For financial services leaders, obstacles relating to these factors hamper the ability to achieve true transformation, while staying ahead of the competition. Additionally, leaders need to consider contemporary business drivers, such as digital asset trading, expanding client franchises and offering new products into both wholesale and retail banking segments.
To surmount these obstacles and achieve greater efficiency in digital asset facilitation, financial players need to optimise digital asset infrastructure. Using a hub model – integrating private ledgers and public blockchains facilitates better portability of digital assets, as well as seamless trading, clearing and settlement.
So, how will you put in place an infrastructure that achieves the performance necessary today and yet also covers your future digital evolution?
Finding the right protocol
What’s been missing, until now, is something that ties together traditional classes of assets and associated activity, with everything to do with digital assets.
You need an interface that seamlessly connects different digital assets (including multiple types of blockchains) and also enables them to interact with all of your traditional trading and post trade systems.
What’s more, you need that solution to be part of your overall digital strategy, so that you can make progress with your Agile and DevOps approach – to help your business grow and evolve over time.
Similarly, you need to interact with service providers and counterparties leveraged to trade, settle, and custody digital assets in a fashion similar to those you use for traditional assets – ideally using the same interfaces. These interfaces should fit into your exiting FinOps and post trade processes.
A neutral, multi-asset network of networks service
GMEX Group’s new Digital MultiHub Platform-as-a-Service (PaaS) solves all these problems for the first time. Capital markets participants can now gain easy access to each other’s regulated digital assets and market infrastructure, using familiar interfaces and processes.
MultiHub, a global cloud-enabled trading and post-trade digital market infrastructure platform, facilitates third-party trading and post-trade services across traditional and digital asset markets. Delivered through a PaaS microservices distribution model, MultiHub enables capital markets participants to gain simple access to regulated digital assets and market infrastructure. MultiHub provides these services, using the same intefaces standards used for traditional assets. It’ll connect you to the range of service providers you need to trade and settle digital assets.
At MultiHub’s core is a ledger through which multiple participants can connect their businesses. A wide range of major institutions as well as start-ups, across regulatory regimes, can engage through the platform for more efficient trading, clearing and settlement of digital assets and associated services.
You can now connect your traditional systems to digital assets, globally, and in line with your ongoing digital transformation. Indeed, GMEX Group (GMEX) can offer clients a range of options for connecting and growing their businesses as the operating and regulatory environment changes:
- Link traditional and digital custody of assets, by multiple custodians, to a diverse range of digital trading options, across brokers and exchanges, using familiar interfaces for simple integration.
- Satisfy retail and institutional clients’ demand for access to multiple digital asset and cryptocurrency markets.
- Develop digital listings for new products, with liquidity and funding benefits, with associated facilitation of new revenue streams.
- Process digital asset trades in a fashion very similar to traditional assets.
Work with a wide range of global participants
You can connect with almost any kind of participant, anywhere in the world, across jurisdictions, via this single point of connectivity. This includes multiple digital exchanges, trading venues, brokers, asset managers, asset service providers, digital custodians, digital banks and fintech and post-trade service providers.
Robust platform with comprehensive support
GMEX built its Digital MultiHub on the AWS cloud platform, using its core ledger technology, and has joined the Amazon Partner Network (APN). Luxoft, a DXC Technology Company, is GMEX’s development partner for implementing and deploying the platform, as well as providing technical support for the ledger technology and associated microservices.
The scale and robustness of the AWS platform, together with Luxoft’s financial services expertise, ensure users won’t have to worry about performance issues or technical complexity. The ledger system used by GMEX, unlike many existing blockchain solutions, is fast enough to provide real-time transaction processing.
GMEX MultiHub High Level Overview
Guaranteed governance
Core ledger technology enables a single view of all digital assets and positions (net asset value – NAV) across all your different trading venues. You can perform asset management, with real-time netting and settlement, and also re-use assets. You can do treasury management, such as intra-day funding, and collateral management, by pledging assets from one or more custodians across multiple trading venues and brokers, with real-time dynamic updates. Moreover, you can also centrally manage credit limits – either segmented or at a portfolio level – across both traditional and digital assets and all venues and custodians.
Environment benefits
The GMEX Digital MultiHub also brings multiple environmental benefits. MultiHub can join together all the currently fragmented digital climate markets – the multiple exchanges, over-the-counter players and other registries – so they can interact more effectively. That means physical carbon, ESG bonds and other digital assets can be traded more systematically – helping to improve green finance.
Moreover, the MultiHub itself is highly energy efficient. It can be optimised, so that activity – in terms of how you utilise public and private blockchains in the best possible way – mean your carbon footprint will improve over time. This is because digital assets can be pledged by custodians, without moving onto a blockchain, as well as netted to optimize settlement, therefore reducing the time, cost and energy usage of constantly writing to the chain.
One-stop shop for Capital Markets organisations
Whether you are a capital markets player such as a bank, asset manager, broker, exchange, post trade operator or service provider, if you want to seamlessly connect your private ledgers to digital asset markets, find out more about how the GMEX Digital MultiHub here. Or contact us to speak to an expert today.
Our full blog series offers a broad range of insights into the future of financial services – and the future that resides in the cloud. Discover more about cloud’s role in long-term success for FSI, by visiting dxc-aws-future-of-banking.com.
1 Fidelity Digital Assets’ 2021 Institutional Investor Digital Assets Study, Fidelity, 2021
[https://www.fidelitydigitalassets.com/articles/digital-asset-study-2021]
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