Banks’ widespread adoption of Blockchain seen at least six years away

Banks’ widespread adoption of Blockchain seen at least six years away

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Widespread adoption of Blockchain technology by bank is not expected for at least six years, according to the latest research on the topic by Six Securities Services. The majority of banks, or 76%, are experimenting with the technology, but only one in five (18%) have launched specific Blockchain-based services.

The reason for this is that banks believe there is no real solution yet and they only expect one in many years away.

The research showed that market participants consider regulatory uncertainty and the lack of in-house expertise as the main barriers to Blockchain adoption. These factors are hindering adoption today and are expected to delay the moment when Blockchain becomes widely-used by six years.

However, banks also greatly acknowledged the benefits the adoption of Blockchain technology carries. Survey respondents pointed out that the technology will have the biggest impact on settlement (38%) and clearing (34%). However, just 20% agreed that the technology will make the clearing process completely redundant.

“Blockchain has the potential to make a number of business models and intermediaries obsolete, which isn’t necessarily a bad thing. It is however important to question the changes that this would bring to the ecosystem,” said Thomas Zeeb, CEO of SIX Securities Services. “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.

The study also reveals banks have different approaches to innovation. Full 18% of the participating banks said they were piloting a specific product or service. A total of 32% of the respondents have developed a proof of concept, another 14% have set up a Blockchain focused innovation lab, while 12% have partnered with a Blockchain company.

Switzerland-based SIX Securities Services is a post-trade service provider with a wide portfolio of solutions in the fields of clearing, settlement, custody, collateral management and repo trading. The company does business across 65 markets. It is part by Six Group, which is owned by its users (approximately 140 banks of various orientation and size).

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