Blockchain adoption by banks at least six years away
Banks are holding back due to regulatory uncertainty and lack of in-house expertise, research by Six Securities Services finds
The widespread adoption of blockchain in financial services could take at least six years, despite three-quarters of major banks having experimented with distributed ledger technology, according to a survey by Six Securities Services.
Banks, while testing potential applications, cited regulatory uncertainty and a lack of in-house expertise as the two biggest obstacles to broad adoption of the technology, which could save global lenders up to $20 billion by 2022.
Regulation emerged as the primary perceived barrier, particularly for global systemically important banks; 72% of the survey participants highlighted this as one of the top-three factors preventing blockchain being adopted in clearing and settlement today.
According to the research, 32% of the banks interviewed have developed a proof of concept, while 18% are piloting a specific product or service; 14% have set up a blockchain-focused innovation lab and 12% have partnered a blockchain company.
As for the actual applications of the technology, 38% of respondents believe it will have the biggest impact on settlement, while 34% say it will be on clearing. Only 20% believe it will make the clearing process completely redundant.
It is, however, important to question the changes this would bring to the ecosystem
Thomas Zeeb, Six Securities Services
"A lot of the conversations we are seeing around blockchain are on the technical level, looking at what is feasible with blockchain rather than what is desirable from a business standpoint. Blockchain has the potential to make a number of business models and intermediaries obsolete, which isn't necessarily a bad thing," said Thomas Zeeb, chief executive of Six Securities Services.
"It is, however, important to question the changes this would bring to the ecosystem. Until the industry has clear indications on sustainable use cases, including costs and benefits, it will be difficult to convince top managers to bring their trusted systems into these new domains," he added.
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