About 50 percent of banks are already working or planning to work with fintech startups or technology companies to augment their blockchain capabilities, while 30 percent have opted for the consortium model, a report has shown.
According to the report by Infosys Finacle titled “Blockchain Technology: From Hype to Reality”, which contains the results of a survey, more than 80 percent of bankers surveyed expect to see commercial adoption of blockchain technology by 2020, with nearly 50 percent of financial institutions already investing or planning to invest during 2017.
The study (which included a survey of more than 100 financial services professionals) was conducted to understand the sentiment towards blockchain technology in the banking industry, the adoption strategies and investments being pursued and the opportunities and challenges that the industry is dealing with.
The report further stresses the fact that top banks across the US, Europe, Australia, Asia and Middle East are exploring blockchain applications by either partnering with startups/technology partners or by creating innovation labs to test their proof-of-concept.
Thirty-three percent of the respondents surveyed expect to see commercial blockchain adoption by 2018, while a majority (nearly 50 percent) see mainstream adoption by 2020. The study shows that the average investment in blockchain projects in 2017 is expected to be about $1 million, whereas 69 percent of the banks are experimenting with permissioned blockchains.
According to the study, 51 percent of executives driving the blockchain initiatives are either Chief Technology Officers or Chief Innovation Officers. The study confirms that the blockchain rollout would be prioritised in business areas where it can significantly improve transparency, automate processes across enterprises as well as reduce settlement and transaction time.
The study further revealed that the top five use cases that are expected to go to production are: cross-border payments, digital identity management, clearing and settlement, letter of credit process and syndication of loans.
Sanat Rao, Chief Business Officer and Global Head, Finacle, said, “This research reaffirms our belief that the blockchain technology has the potential to help banks reimagine banking processes. The technology can help banks automate inter-organisation processes, significantly improve transparency and reset existing operational benchmarks. Several progressive organisations have already executed pilots to validate these propositions. We believe, in the coming quarters, the industry will experience greater momentum towards rolling out lab-pilots to real-life use cases.”