The annual CordaCon conference brings together industry leaders and technologists to look at key trends in blockchain and digital transformation. This year’s event included a presentation by Robert Palatnick, Managing Director and Global Head of Technology Research and Innovation and Artem Korenyuk, Executive Director, Business Innovation, who discussed DTCC’s digitization strategy.
Palatnick opened his remarks to the virtual audience noting that DTCC is expected to help lead the technological evolution of the financial services industry. Both executives play a key role in leading the firm’s progress towards digital processing and work with distributed ledger technology (DLT).
At DTCC, the Business Innovation and Technology Research and Innovation groups work closely together to identify new opportunities and evaluate new technologies and strategies with key stakeholders in the financial services industry.
The Technology Research and Innovation team works specifically to leverage the business opportunities that come from the Business Innovation Team.
Palatnick noted, “the Technology Research and Innovation group advances DTCC’s technology strategy—by leveraging new and emerging technology by driving research, experimentation and implementation of emerging technology such as DLT, cloud, security, AI and machine learning.”
Technology Research and Innovation combines forward-thinking individuals from within DTCC who understand client needs with those who have extensive expertise in the technology being evaluated. The teams’ goal is to assess if a business concept is feasible from a technology perspective and viable from a business perspective. Alternatively, if the idea doesn’t work, the team can course-correct, pivot, or pull back.
Robert Palatnick, DTCC Managing Director and Global Head of Technology Research and Innovation.
Focus on Impact
While Technology Research and Innovation provides the technical acumen, the Business Innovation team focuses on the potential impact of emerging technology from a business angle. Korenyuk noted, “Will the technology be a disruptor or an enabler? What will be the technology’s impact and on what time horizon? This helps us determine the firm’s level of involvement—from doing further research, executing a proof of technology or POC, all the way to launching a brand new product in the ecosystem.”
One common denominator that spans both teams is the ability to execute with speed and agility when evaluating new opportunities and new technologies, all while operating in a large enterprise. Palatnick described DTCC’s Rapid Proofing Framework that enables both groups to operate quickly and efficiently outside the enterprise's traditional guardrails and boundaries. Rob’s group developed a cloud based environment that can be used for proof of concepts and prototypes of technology solutions, allowing both groups to evaluate whether the business need is met and if the technology is fit for purpose, thereby enabling a shorter path to progression.
"This cloud-based environment has allowed us to work with third parties that can customize their solutions to our requirements, as well as third-party partners, to bring development resources and components that accelerate our ability to prototype. It is through these tools that we've built multiple prototypes, including Projects Ion and Whitney," Palatnick said.
Projects Ion and Whitney
Given DTCC’s role in the post-trade lifecycle, digitization and tokenization have been a focus of our groups for some time, given that they can enable the future automation of the asset lifecycle. As part of our exploration, we identified a number of opportunities, two of which are Projects Ion and Whitney.
Project Whitney explores the opportunity to offer digital infrastructure for the private markets. Designed to serve as an abstraction layer between private market issuers and their placement agents, Whitney ultimately serves as a common connectivity and integration point. Whitney also offers the ability to be a single point of compliance enforcement and restriction validation while supporting a variety of private and public blockchain interfaces.
According to Korenyuk, "DTCC believes Whitney is solving for one of the most critical components that’s currently missing from the private market space and is necessary for the continued growth of the private market ecosystem."
Project Ion presents an opportunity to fundamentally redesign and modernize the post-trade netting and settlement process into a more integrated system that can drive significant margin efficiencies and enable a more seamless path towards accelerated settlement. A core part of the design is a brand new netting and settlement system that is dynamic, flexible and “T+0 Ready” engine, with the ability to support multiple settlement cycles.
Both Ion and Whitney are crucial initiatives for the industry that are leveraging DLT as part of their tech stack and both have been through a thorough market validation phase. DTCC has assessed client demand, refined design, and tailored the tech stack to meet business and client needs. Korenyuk stated, “our primary focus is on the value proposition and client demand, and we select the technology that can best enable the proposition.”
Artem Korenyuk, DTCC Executive Director, Business Innovation.
DTCC is currently working on a business-driven modernization strategy across many of its core post-trade processing services within the ecosystem as a whole. These processes are being reimagined with better workflows and efficiencies in mind. It’s not simply a “lift and shift” of technology from one platform to another, according to Palatnick.
“We want to make sure that we’re not just modernizing the tech stack but are also re-imagining the workflows and processes to ensure a more optimized interaction between DTCC and our clients. This is a key aspect of future-proofing that underpins our modernization strategy and ION and Whitney are two initiatives that are moving this forward.”
The Technology Research and Innovation team has been continuously evaluating different stacks across these projects, focusing on technology that is fit for purpose, meeting enterprise and industry level-requirements, as well as non-functional requirements. The ability to be resilient and continue operations through cyber threats or market disruptions is critical to how DTCC serves the industry.
Korenyuk summarized the presentation noting that DTCC is keen to help lead the industry forward in modernizing the capital markets infrastructure, all while ensuring that this modernization is underpinned by a clear quantifiable impact.
“The industry is in pursuit of the quantifiable benefit to what DLT is uniquely positioned to offer—the operational and/or risk savings that can be achieved will be the primary driver of industry adoption. These data points will be a core inputs into an internal case for change for each financial institution across the street, as we collectively move towards a more future proofed tech stack.”