Finacle, LTP Report Predicts Large Adoption of Blockchain by 2020

Infosys Finacle and Let’s Talk Payments (LTP) released a report earlier this month called, “Blockchain Technology: From Hype to Reality”.  The companies highlight the following findings:

“The study polled over 100 senior financial services leaders at more than 75 organizations across the world and revealed that:

  • 50% of banks are already investing in Blockchain or will invest in 2017
  • The average investment in Blockchain Projects in 2017 is expected to be about $1 million
  • 33% of respondents expected to see commercial blockchain adoption by 2018, while a majority, nearly 50%, see mainstream adoption by 2020
  • A majority of banks, about 69%, are experimenting with permissioned Blockchains, followed by 21% who plan to use hybrid variants
  • Cross-border payments, digital identity management, clearing and settlement, letter of credit process and syndication of loans are the top 5 use cases chosen by the respondents as the most likely for commercial adoption
  • About 50% of the banks surveyed are either working with a FinTech start-up or technology company to augment their blockchain capabilities, while another 30% have opted for the consortium model”

Chief Business Officer and Global Head of Infosys Finacle Sanat Rao raises questions and challenges that the industries interested in blockchain must tackle;

“While the report reiterates the near unanimous agreement about blockchain’s transformational potential, several questions remain: How soon can the industry create collaborative networks with this technology? Can the technology meet the scalability requirements? How can we tackle the lack of governance models? How do we integrate multiple networks with existing infrastructure?”

Despite such gray areas though, Rao urges startups and banks to move forward with blockchain technology rather than “wait for all answers to emerge.”  Indeed, technology oftentimes moves much faster than establishing collaboration, regulation, and proper infrastructure.

“Banks must experiment with the technology in a controlled environment to discover the value it can bring in their context and basis that commit towards production deployments.”

In further detail in the report, Finacle and LTP separate participating banks into three categories: innovators, early followers, and late adopters.

The report states that 50 percent of surveyed banks are waiting for blockchain to reach a more mature stage before they will begin to seriously invest in the technology.  These are the late adopters.

As for the 35 percent of surveyed banks that are early followers, they have already planned between $1 million to $10 million in investments in blockchain because they have identified business cases and a technological fit for their organizations’ strategies.

The remaining 15 percent of surveyed banks that are innovators are further along with blockchain onboarding, including dedicated teams that support the technology and/or partnerships with startups or companies that work on blockchain.

The report concludes with a prediction that commercial adoption is not far — 80 percent of banks expect large commercial adoption of blockchain by 2020.

Finacle offers services and technology around core banking, online banking, mobile banking, customer relationship management, payments, and other financial needs.

LTP is a fintech content and research platform that curates news on payments and digital commerce.


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