Banks' initial responses to fast-moving developments in digital currency - appointing mid-level technology executives to industry consortia, participating in the conference circuit and running limited distributed ledger simulations - have left them flat-footed, claims the consultancy.

Lack of a clear path forward is particularly problematic for international payments and trade finance, where distributed ledgers have the greatest near-term potential for disruption.

Blockchain-based alternatives to the global correspondent banking model for processing cross-border transactions are already gaining credence, presenting opportunities to cut out the middle man, improve visibility and reduce error rates and costs.

In trade finance, which generates roughly $23 billion of direct banking revenues worldwide, similar forces are work. About 50% of banks' costs for a letter of credit arises from manual document handling and checking, which creates delays, errors and expense. That opens the door to huge potential improvements from distributed ledgers, says Bain, though commercial offerings capitalising on that possibility are still in early stages.

David Gunn, head of Bain's payments team in Emea, comments. "The wave of investment in digital currency start-ups clearly signals that payments channels are attracting a new degree of interest, and new competitors are changing customer expectations. Innovation is upon us, and doing nothing is not a viable option. Now is the time for banks to move from experimentation to action."

However, most financial institutions remain in 'experimentation mode', he says, wary about the scalability of the technology, privacy issues associated with broadcasting commercially sensitive information about money flows, and the volatility and governance of non-fiat digital currencies.

With such a large prize available, faster-moving, more committed banks stand to gain significant share, says Glen Williams, who leads Bain's global payments sector.

He says that interviews conducted with more than 50 senior bankers, venture capitalists, technologists, international payment association executives and start-up CEOs, convinced the firm that most banks are not well prepared for the forthcoming revolution.

Regulatory hurdles are currently keeping the barbarians at the gates, but they also provide a comfort blanket for more conservative banks.

"Change will not come easily for banks," says Williams. "They recognise that distributed ledger technology has the potential to improve the speed, transparency and efficiency with which payments are made, but the current market structure gives them a powerful incentive to stay the course. About $300 trillion of transactions flow through these networks each year, creating significant revenues for banks. Further, network dynamics make it hard for alternatives to scale up: participants will not join a network until it has sufficient reach, but reach comes only from widespread participation."