Vol. 7, Issue 1, Part N (2025)

This paper evaluates the transformative impact of Distributed Ledger Technology (DLT), commonly known as blockchain, across core financial services sectors, including capital markets, cross-border payments, trade finance, and Real-World Asset (RWA) tokenization. The research establishes that DLT drives significant operational efficiencies by fundamentally changing the mechanisms of trust and settlement. This technological shift is characterized not by evolutionary improvement, but by a foundational restructuring of transaction governance.
Synthetic quantitative analysis, supported by empirical evidence, reveals profound efficiency gains. The mechanism of atomic settlement (T+0) via smart contracts reduces post-trade operational overhead by an estimated 50% and virtually eliminates systemic counterparty risk by making the exchange of assets and cash simultaneous. Furthermore, DLT-based cross-border payments promise cost reductions up to 80% compared to traditional correspondent banking models, drastically improving speed and transparency. This operational success is corroborated by empirical studies showing a positive correlation between DLT adoption and enhanced bank financial performance metrics, specifically Return on Assets (ROA) and Return on Equity (ROE).
Despite substantial technical maturity, scalable institutional adoption is primarily constrained by non-technical barriers. The intrinsic conflict between DLT’s immutability and data privacy mandates, particularly the European Union's General Data Protection Regulation (GDPR) Right to Erasure (Articles 16 and 17), remains a significant legal challenge. Technical hurdles center on scalability and the fragmented liquidity caused by isolated, incompatible DLT ecosystems, leading to a critical interoperability crisis.
The analysis concludes that DLT adoption in finance is concentrated in private, permissioned networks (such as Corda and Hyperledger Fabric) that prioritize institutional governance and data confidentiality. Future systemic integration requires proactive policy innovation, utilizing mechanisms like regulatory sandboxes to align distributed technological capability with existing legal and prudential requirements, thereby ensuring a controlled transition to a digital financial infrastructure.