The reason for all the limitations outlined above is that the traditional financial market infrastructures ― brokers, banks, investment banks, custodians ― are inefficient, as they are built on centralized databases. Their crucial drawback is that, due to cybersecurity reasons, access to changing the database or getting information from it is possible only through an intermediary, which slows down all the operations. Furthermore, many processes are manual, which further increases complexity and creates space for mistakes. Despite all the sophistication of centralized finance systems, just like all the money and effort invested in them, they are fundamentally flawed and built on a wrong basis.
Here's an analogy to gain a deeper understanding: General Motors has invested hundreds of billions of dollars in their engine production line throughout the last century. This system has been improved to near perfection, but despite this, it has a fundamental underlying problem: these engines work on fossil fuels. The given technology makes it weak compared to new entrants like Tesla, who had less time and money to design the system but operate on a different, more superior basis of electric engines. For General Motors, all of the prior investments into the old system are rather an obstacle to adapting to modern requirements.
With blockchain, it works the same way. This is the reason why Coinbase is worth more than any stock exchange in the world. If this topic excites you and you want to dive deeper, see the interview with Douglas Borthwick, Chief Marketing Officer at INX
― a regulated US-based exchange for tokenized securities, that we released on our YouTube channel