Blockchain technology has been around since 2009 when the bitcoin network went live. Distributed ledger technology (DLT), of which blockchains are merely the best-known example, has since been put to a variety of uses in financial services, such as securities trading and processing, syndicated lending, insurance and payments. But its transformative potential has not yet been realized. This is because its applications are too tightly connected to its underlying technology, requiring internal and external participants within a DLT application to invest in the same technology, or risk encountering more silos and disparate platforms. Only businesses that can build, buy, or form a consortium for the DLT infrastructure will gain the benefits – the speed, accuracy, immutability and the consequent efficiency. Even then, these businesses create access barriers for others who are unable or unwilling to invest in blockchain.

But this obstacle is being overcome. New technology that separates the application layer from the underlying DLT infrastructure allows previously incompatible DLT networks across companies to exchange information seamlessly across ledger infrastructures. In other words, it creates a network-of-networks – potentially, a Global Economic Network. This will surely benefit the consumers of financial services, by way of better products and lower prices. But it will also challenge the business models of financial institutions, just as products made possible by the internet have shaken up the payments business.

This paper explains the coming Global Economic Network and the technology behind it. And it considers the strategic implications for segments within financial services, such as incumbent wholesale banks, which are likely to be profound. Parts of the wholesale banking value chain may need to be given up to more agile non-bank competitors. But, in this process of “opening up”, the successful wholesale banks will dramatically extend their customer reach in the parts of the value chain they maintain.