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2016 Wall Street blockchain investment to top $1bn

24 June 2016  |  14150 views  |  0 Wall street sign

Financial service firms and technology providers around the world will spend more than $1 billion this year as they race to bring distributed ledger tech to capital markets, claims Greenwich Associates.

Of 134 market participants interviewed by Greenwich, most think that, despite being in its infancy, blockchain technology has the potential to transform global capital markets thanks to its ability to securely transfer digital assets between parties in near real time, without the need for an intermediary.

With firms rushing to carry out internal pilots and band together in various consortiums such as the R3 and Hyperledger projects, companies are ramping up their blockchain budgets. Banks, brokers, exchanges, and central counterparties are taking the lead, while many asset managers adopt a more wait-and-see approach.

Among firms stating they have some blockchain initiatives underway, 32% have an annual budget in excess of $5 million per year, and a further 15% have budgets in excess of $2 million. Projected across the entire financial services industry, that level of spending will likely top $1 billion in 2016, says Greenwich.

Firms are betting that this will pay off in the long term through reduced operational costs and shorter settlement times with fewer fails. Respondents rank payments as the most promising potential application for blockchain.

Even regulatory questions are not seen as likely to hold back innovation in distributed ledger adoption, although respondents are worried that vested interests in legacy technology systems could slow progress.

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