A new report released by Greenwich researchers indicates that financial services industry is spending $1.7 Billion on Blockchain annually. The report goes on to state that banks and other companies are already moving past the proof of concept stage to DLT products better known as distributed ledger technology.
The report shows that the budget that was spent on the blockchain technology increased by 67% last year. Also, one in ten banks and other financial firms admit that they have spent over $10 million in distributed ledger technology. It’s not only the number of financial institutions that has increased but also the number of employees working on blockchain initiatives has doubled over the past year.
However, as much as DLT products have been on top of the agenda for many financial service providers, implementing the technology is proving to be tougher than many expected. This sentiment is echoed by the vice president of Greenwich Associates market Structure and Technology, Richard Johnson who says more than half the executives they interviewed confessed implementing DLT was difficult than they expected.
Despite all this, the study notes that more than three-quarters of all the projects that are in the development stage now will go live within two years.
Some of the functions that stand to gain from the adoption of the distributed ledger technology by financial service providers include clearing and settlement. It’s the one area the blockchain will save financial institutions $10 billion a year according to an estimate from Accenture.
Another area is payments, many financial institutions are exploring the idea of shifting part of their payment onto the blockchain. Use of the technology to launch their own digital currencies is being considered too.
Other notable areas that financial institutions are exploring include trade finance, Identity, and syndicated loans.
Now that the financial services industry is spending $1.7 Billion on Blockchain annually, are we on the brink of some revolutionary technology in the financial industry? Share your thoughts in the comment section below.