Distributed ledger technology in banking and finance: insights from the literature

Abstract

This paper aims to analyse the literature on distributed ledger technology (DLT) and blockchain in the banking and financial industry. The use of these technologies has extended beyond the creation of private cryptocurrencies, and they are implemented in numerous areas. The methodology employed in this study consists in the review of the most relevant literature by focusing on theoretical and empirical studies as well as on the guidelines and surveys performed by national and international banking and financial authorities. This paper shows that the most promising uses of DLT in finance include: 1) application for specific banking activities; 2) application to improve the functioning of the supply chain finance; 3) creation of central bank digital currencies (CBDCs). Lastly, this paper detects avenues for future research in this field, which include the design of CBDCs, identification of the determinants of adoption of DLT, the use of the interventionist research to investigate into the organisational challenges of blockchain implementation in the banking industry. We contribute to the literature by providing a non-automated literature review and proposing a research agenda to advance our knowledge about the use of this technology in banking and finance.