Financial service industry is adopting blockchain, slowly
Global banking sector is increasing its annual blockchain spend by almost 70% while doubling the people assigned to blockchain-related initiatives
The global financial services industry currently spends about $1.7 billion annually on distributed ledger technology, according to a recently published report from US researcher, Greenwich Associates, with spending on blockchain increasing year-on-year by almost 70%.
Greenwich says their findings reveal that while uptake is slow, and implementing blockchain into everyday work systems has proven more problematic than originally estimated, banks and other financial companies are moving from proof-of-concept stages to ones that develop commercial blockchain-based products.
During February and March 2018, Greenwich Associates carried out interviews globally with more than 200 financial industry decision-makers to assess the current state of blockchain adoption in capital markets. The study shows one in ten banks and financial services companies have blockchain budgets of at least $10 million while in 2017 the number of people assigned to blockchain initiatives doubled, with the average top-tier bank now having 18 full-time employees dedicated to blockchain projects.
The majority of the projects are focused on looking at ways to achieve cost reductions, on shortening settlement times and on minimizing operational risks but, concludes the report, the financial industry is not close to widespread adoption of blockchain technology and that banking still lags behind other sectors, most notably supply chain management.
Businesses working on supply chains are not governed by the same level of regulatory constraint as financial firms and have also found blockchain’s strengths, especially with establishing verifiable and secure data and business processes, to be a good fit for their industry.
While half the finance executives interviewed by Greenwich said blockchain was harder to implement than first expected, the report concludes that three-quarters of projects now under development are scheduled to be live within two years.
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