Financial services continue to undergo a transformation due to de-risking, complex products, low margins, innovation from fintech startups, lack of inclusion, and regulatory challenges. New technology being developed and adopted by incumbent institutions and fintech startups is driving change across nearly the entire financial services sector from consumer payments and banking to institutional investing and trading to underlying clearing and settlement infrastructure.
The purpose of the Accord Financial Services Working Group is to produce specifications and open source tools to improve the ability of financial services industry to face its challenges and better serve consumers. Essential to this goal is to enhance the ability of a wide variety of investment, trading, and other financial contracts to dynamically reflect their surrounding conditions and risk-return profiles. Agreements that stand to benefit from the automation, connectivity, and security that stem from being smart include loan and related credit agreements, stock and other asset trading contracts, and commercial letters of credit.
Key benefits from smart financial contracts include real-time incorporation of data into financial contracts and relationships, automating a wider range of activities and processes to lower fees and costs, improving transparency, safeguarding assets, and improving liquidity and systemic risk.
The Financial Services Working Group will seek to build upon existing technology and practices with new use cases, studies, and specifications applicable specifically to the implementation of smart legal contracts. Several aspects of financial services make it the industry most suited to the adoption of smart legal contracts, including the existing use of technology and the nature of financial assets and transactions which often do not have any physical component. Nonetheless, industry inertia, differentiated and legacy technology, and strict regulatory requirements present significant hurdles to widespread smart legal contract adoption.