Preface from Chief Product Officer Donna Milrod

In 2021, when we launched our award-winning Digital Digest – a compendium of our best, most recent and noteworthy thinking on all things digital – we did so by delving into the data revealed by our first State Street Digital Assets Study of global institutional investors. What we found in that first survey reinforced the educational impetus behind this publication: While enthusiasm around digital finance was running high, true understanding (even among financially sophisticated audiences) remained relatively low.

Since then, we’ve done our best to keep the Digital Digest as an educational, informative and provocative must-read. We’ve also established an annual tradition of conducting our survey in partnership with Oxford Economics. In April, we surveyed C-suite leaders and investment officers from around 300 institutional investors worldwide with assets under management (AUM) between US$1 billion and US$500 billion or more.

It’s worth noting that our survey is not a quantitative “snap poll” with robocall-types of questions. Rather, it is comprehensive and qualitative in nature as it delves into the data on all things digital. Our survey findings form the backbone of this edition of the Digest, which focuses on topics that include:

• The revenue and cost-savings growth that investment firms believe they can realize from the benefits derived from digital ledger technology/blockchain-based trading (including lower compliance and trading costs, increased liquidity, expanded market access, and faster and more efficient trading).
• The high level of preparedness of firms in terms of meeting the digital moment (with nearly 40 percent of institutions having a dedicated digital asset team and another 40 percent at advanced stages of development or planning; and nearly half of respondents either currently practicing or are extremely prepared to transfer digital assets to ledgers).
• The tension that exists between respondents’ analysis of the benefits of their own preparedness and their belief that lack of awareness and demand among investment institutions indicates that it will take more than 10 years to make traditional finance and decentralized finance (DeFi) interoperability mainstream.
• The endorsement of the important role core financial services providers are expected to play even in a tokenized asset environment – with more than half of respondents expecting custodians to service them as transfer agents for tokenized assets on digital platforms.

Additionally in the Digest, we examine opportunities presented by the integration of emerging technologies including digital assets, blockchain, generative artificial intelligence (AI) and quantum technology. In this edition, you will also find an article about regulations, explaining the relative clarity between different jurisdictions of rules governing digital asset access – especially via ETFs – as well as the legal implications of using public and private blockchains.

If all things digital begin with only two digits – zero and one – forming a binary code that encompasses an entire universe of applications, then our annual survey data paints a compelling picture of an industry in a state of transition. No matter what your personal thoughts are on the rapid state of industry change, this edition of the Digital Digest offers both sweeping statements and nuggets of insight that will surprise and delight you.

Sincerely,

Donna Milrod
Chief Product Officer and Head of State Street Digital®