Major Wall Street banks have been investing in blockchain technology for years now, but few products have yet to actually reach the market. That's because we're still in a "proof of concept" phase, according to new Morgan Stanley research published this week.

"Whilst Blockchain, or distributed ledger technology, has been around for a number of years, it has only really begun to gain traction in the mainstream in the last 12 months," write analysts at the bank.

One company that's leading the way? BNY Mellon.

Morgan Stanley says the custody giant has created a parallel infrastructure using blockchain technology. BDS360 (short for Broker Dealer Services 360) monitors the custodial bank's ledger simultaneously and creates a second, redundant ledger that serves as a backup record. It's been up and running since March 2016.

Here's how it works:

Illustrative structure of BNY Mellon's BDS360 in relation to existing infrastructure BDC. Morgan Stanley Research

It "provides a cost-effective way of adding extra layers of resiliency to the current platform," the bank said in a note.

BSD360 is the closest thing to a market-ready product, says Morgan Stanley. All that's left is to roll out is client-facing portions, which comes with its own set of challenges.

"There is still work to be done to figure out the specifics of client interface," says Morgan Stanley. "BNY Mellon would also need to engage in regulatory dialogues, and establish necessary standards and protocols. We think BNY Mellon is well positioned to take on those challenges, with ~85% market share in the [bond] space."

Since it's only internal, and merely duplicates the current settlement processes, it's not a cost-save move by BNY Mellon. Rather, it's a cheap way to add another layer of resiliency, according to Morgan Stanley.

Other examples of blockchain experiments include the Australian Securities Exchange, Monetary Authority of Singapore, and Ripple, a blockchain startup that wants to break SWIFT's stranglehold on intra-bank messaging.

These proofs of concept are paving the way for cost-saving innovations, but there's still a long way to go.

"Adoption of some form of Blockchain technology by incumbents is likely," writes Morgan Stanley. "Given the amount of collaboration required, we expect it could take several years to replace existing back office functions."