By Daniel Lanyon on Friday 30 September 2016
Blockchain interest is gathering pace in the incumbent banking world with the likes of Deutsche Bank, UBS and Bank of America all recently revealing plans to utilise the technology.
Commercial blockchain solutions are rapidly being adopted throughout banking and financial markets as the giant incumbents feel the pressure of innovating fintech firms, dramatically faster than initially expected, finds two new IBM studies.
The two studies suggest larger banks are defying industry expectations and are leading the charge to embrace blockchain technology with ‘trailblazers’ being twice as likely to be large institutions with more than a hundred thousand employees -- not small start-ups or Fintech firms.
These trailblazers expect the benefits from blockchain technology to impact several business areas, with four out of five saying both business and consumer lending to be two areas where it will open up growth opportunities.
When asked which blockchain-based new business models could emerge, 80 percent of banks surveyed identified trade finance, corporate lending and reference data as having the greatest potential.
Fifteen percent of banks and 14 percent of financial market institutions interviewed by the firm said they intend to implement full-scale, commercial blockchain solutions in 2017 in a sure fire sign that the banking giants of the world are taking notice of the disruption to their model brought about fintech start-ups as well as established online lending platforms such as Funding Circle, Lending Club, SoFi, Ondeck, Ratesetter and Zopa.
The new IBM study, "Leading the Pack in Blockchain Banking: Trailblazers Set the Pace" is based on a survey of 200 global banks. A second new IBM study, "Blockchain Rewires Financial Markets: Trailblazers Take the Lead" is based on a survey of 200 global financial markets institutions.
Mass adoption isn't that far behind with roughly 65 percent of banks expecting to have blockchain solutions in production in the next three years, one of the report finds. Of those banks already adopting blockchain, more than 70 percent are prioritising it ‘in order to break down existing barriers to creating new business models and reach new markets’.
"There are many advantages to being an early adopter of blockchain technology," said Likhit Wagle, global industry general manager of IBM’ Banking and Financial Markets business.
"To start, first movers are setting business standards and creating new models that will be used by future adopters of blockchain technology. We're also finding that these early adopters are better able to anticipate disruption, fighting off new competitors along the way," he added.