When all the hype is over, survey report shows that it will no longer be a question of will banks take on Blockchain but rather when
Blockchain in banking has moved in less than 10 years from hype to reality. It’s potential – or otherwise – has been hotly debated since it came into being in 2009 as the substratum foundation of Bitcoin. There are those who have claimed that it is as fundamental to the rise of Bitcoin as the internet itself and many banks have moved ahead on blockchain technology from a time when it was debated and deliberated upon and are now embracing it as proof of the rewarding future from its concepts.
But it has and is leaving many questions behind it as it appears to forge ahead. Questions like where does the IT and business consultancy industry in India stand with respect to blockchain technology and just how much of it is still hype and how much is reality? What is the way forward in such a climate of mixed reactions to this still relatively new technology?
Half of banks already subscribed to blockchain
The latest research findings from a survey of more than 100 business and technology bosses within as many financial institutions found that when it came to investing in blockchain technology, just over half had already subscribed to it. In the analytical breakdown of those banks that are using blockchain it is seen that while half of them are waiting for the technology to improve and mature (tagged as late adopters), another 15 percent are innovators while a further 35 percent are classed as early followers.
Banking investment in blockchain on average this year by new adopters will be about $1 million, while the innovators have already invested over $10 million in blockchain technology. This cash injection is not only supporting the latest blockchain initiatives, reveals the survey, but is going beyond the traditional realm of settlement, clearing and cross-border remittances.
Commercial adoption of the technology by 1 in 3 by 2018
By next year it is expected that one in every three banks will make the commercial adoption of blockchain technology a reality while half of the banks surveyed will do so by 2020. The most likely banking services to benefit will be in cross-border remittances, digital identity management, syndication of loans, letter of credit processes, as well as clearing and settlement processes.
Private permissioned blockchain is the popular choice with surveyed banks – a massive 70 percent giving this the thumbs up. Perhaps not surprisingly, partnerships come in as a second firm favourite for blockchain adoption. To augment their blockchain activity, figures show that half the banks are either working with a technology company or fintech outfit while almost a third are opting for a consortium-type model.
Phased approach the right way to go, say banks
An overall phased approach towards blockchain implementation is clearly identified in the survey report. Financial Institutions, including banks, are endeavouring to create networks with partners already established in the industry – partners that know their process, or internal integration. It will be in the next two years that first use cases will be seen in intra bank services. It’s clear therefore that, as the report suggests, it is no longer a question of will banks adopt blockchain, rather more questions of when and how they will do it.