A new survey of global banks and financial infrastructure firms finds that the majority expects the financial services sector to adopt blockchain technology within the next five years.
Specifically, a survey of the Post Trade Distributed Ledger Group's members (PTDL Group) — which include banks and financial infrastructure firms, such as custodians, securities depositories, clearing houses and exchanges working on blockchain technology — finds that 29% expect the industry to implement blockchain technology in the post-trade environment within the next two years and 48% believe that it will happen in three to five years.
The remainder expects the adoption of blockchain will take more than five years.
Blockchain, also known as distributed ledger technology (DLT), is widely seen as a future model for documenting and settling securities transactions more quickly and securely than the current system. The PTDL Group's members cite operational cost savings, reduced settlement cycles, and improved transparency, as the top three benefits to utilizing blockchain technology.
The biggest obstacles to implementing blockchain, the survey finds, are the financial services sector's willingness to adopt the technology, followed by concerns such as regulation, confidentiality and a lack of standardization.
"The survey shows that blockchain could become mainstream in just a couple of years," says Jörn Tobias, a representative of the group and managing director with State Street. "The big barrier to growth, however, is seen as caution: fears over adoption and hesitation about embracing what remains cutting-edge technology. This is a core focus for the PTDL Group – engaging with financial services firms, technology companies and other stakeholders and helping catalyze adoption across the world for the benefit of all parties the financial post-trade area."
The survey, which was carried out with senior industry executives this past autumn, also found that 20% of survey participants said blockchain has "very high" strategic importance in their own organizations; 34% rank it as "high" importance; and only 7% said it was of "low" importance.