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Time has come to extract value from blockchain investment – new Finextra paper

20 September 2016  |  9692 views  |  0 cryptocurrencies

Latest Finextra paper finds blockchain has grown up during 2016, and explores industry’s efforts to exploit its potential in a shorter timeframe.

It may still take up to 10 years for the blockchain tipping point to arrive, but participants across the financial services landscape are focused on deriving tangible value from their investment of time and money into blockchain experimentation in the very near term. This is among the key findings of a new paper produced by Finextra in association with EPAM.

Based on in-depth interviews with a wide range of market participants from banks, market infrastructures and key technology vendors, the paper explores the increased urgency with which the industry is seeking to press home the advantages blockchain could bring across a range of activities, including securities, payments and trade.

Entitled 'From hype to reality: Developing a pragmatic approach to blockchain in financial services', the paper identifies a number of developments in recent months which show the industry is taking a more measured approach to blockchain, while also looking to shorten the time to value from this innovation. Key among these is a growing emphasis on adoption by market infrastructures as the route to tackling the network effect challenge and achieving mainstream adoption quickly and efficiently.

Clearly the dust has not completely settled around blockchain: its exact sweet spots for implementation, the standard fabric that will end up dominating and just exactly how to handle the task of changing the wheels on a moving vehicle and going live on day one with this new infrastructure for markets in flight are all questions that still need to be answered.

As Balazs Fejes, Co-Head Global Business, EPAM, says: “There are still plenty of predictions about the kind of impact blockchain will have – whether it will be the new internet, whether it will be as disruptive as electronic trading, whether Bitcoin, far from being old hat is actually still integral to the future of blockchain – and the excitements, debates, disagreements and discussions are important as part of the process of reaching clarity and zeroing in on the most significant opportunities for this technology.”

He adds: “The good news is that, in the background, genuine progress is being made towards capitalising on those opportunities in the real world.”

Indeed, the new paper reflects a marketplace taking a much calmer approach to this innovation, understanding that some questions will only be answered over time – but recognising that that does not mean progress cannot be made in the interim. This is good news, given the problems the industry needs to solve, as one observer quoted in the paper points out: “There are so many problems, and blockchain can help us with many of them: providing invaluable elements like immutable record, permissioned access and a golden source of data.”

Through sections exploring how blockchain has matured during 2016, the areas of financial services in which it is most applicable, the ways in which it might go mainstream and the roadblocks that could still send it off course, the new paper seeks to offer insights to financial institutions grappling with what the technology means for their business, concluding with some insights on what a pragmatic approach to blockchain might look like.

To find out more, download the paper here.

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