Industry reluctance holding blockchain back
13 February 2017 London
Image: Shutterstock
Blockchain is high on the agenda in the post-trade sector, but the lack of industry adoption could prove an obstacle to the technology, according to a survey by the Post Trade Distributed Ledger (PTLD) Group.
The group commissioned research among its members, including global banks, custodians, central securities depositories, clearing houses, exchanges, regulators, government agencies and central banks, and saw responses from 45 individuals.
When asked about the strategic importance of blockchain, 20 percent said it is ‘very high’ on the agenda, while a further 34 percent said it is ‘high’. Only 7 percent of respondents said the technology is a low priority.
However, 78 percent of respondents named industry adoption as an obstacle to implementing blockchain in the wider post-trade industry.
Regulation was the second-most cited obstacle, named by 56 percent, followed by concerns around confidentiality, named by 51 percent, and a lack of standardisation, named by 49 percent.
A lack of available talent related to blockchain was also considered a concern by 23 percent of respondents.
Despite the challenges, 48 percent said they think blockchain will be adopted in the financial post-trade area in the next three to five years. A further 29 percent said they see this happening in the next year or two.
Equally, 50 percent said they see blockchain as an opportunity, compared to 10.5 percent who said they see it as a threat.
The top anticipated benefit of blockchain to the post-trade sector is operational cost savings, highlighted by some 81 percent of respondents.
This was followed by the possibility of reducing settlement cycles and the increased transparency blockchain can bring, named by 67 percent and 43 percent, respectively.
Jörn Tobias, managing director at State Street and a PTDL Group representative, said: “The survey shows that blockchain could become mainstream in just a couple of years, with benefits such as better transparency, shorter settlement cycles and cost savings clearly identified by our members. The big barrier to growth, however, is seen as caution: fears over adoption and hesitation about embracing what remains cutting-edge technology.”
“This is a core focus for the PTDL Group—engaging with financial services firms, technology companies and other stakeholders and helping catalyse adoption across the world for the benefit of all parties the financial post-trade area.”
The group commissioned research among its members, including global banks, custodians, central securities depositories, clearing houses, exchanges, regulators, government agencies and central banks, and saw responses from 45 individuals.
When asked about the strategic importance of blockchain, 20 percent said it is ‘very high’ on the agenda, while a further 34 percent said it is ‘high’. Only 7 percent of respondents said the technology is a low priority.
However, 78 percent of respondents named industry adoption as an obstacle to implementing blockchain in the wider post-trade industry.
Regulation was the second-most cited obstacle, named by 56 percent, followed by concerns around confidentiality, named by 51 percent, and a lack of standardisation, named by 49 percent.
A lack of available talent related to blockchain was also considered a concern by 23 percent of respondents.
Despite the challenges, 48 percent said they think blockchain will be adopted in the financial post-trade area in the next three to five years. A further 29 percent said they see this happening in the next year or two.
Equally, 50 percent said they see blockchain as an opportunity, compared to 10.5 percent who said they see it as a threat.
The top anticipated benefit of blockchain to the post-trade sector is operational cost savings, highlighted by some 81 percent of respondents.
This was followed by the possibility of reducing settlement cycles and the increased transparency blockchain can bring, named by 67 percent and 43 percent, respectively.
Jörn Tobias, managing director at State Street and a PTDL Group representative, said: “The survey shows that blockchain could become mainstream in just a couple of years, with benefits such as better transparency, shorter settlement cycles and cost savings clearly identified by our members. The big barrier to growth, however, is seen as caution: fears over adoption and hesitation about embracing what remains cutting-edge technology.”
“This is a core focus for the PTDL Group—engaging with financial services firms, technology companies and other stakeholders and helping catalyse adoption across the world for the benefit of all parties the financial post-trade area.”
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