The global financial industry appears to be separating into two camps: those that are trying to understand what blockchain could mean for their business and those that are not.
More than a third of financial services organisations globally do not know what blockchain is while two thirds of those familiar with the technology believe it’s the biggest technological innovation since the internet for finance, according to new research.
A new report from Pegasystems and Cognizant, undertaken by Marketforce, suggests that with many seeing this as game changing technology for the industry, organisations that are not familiar with distributed ledger tech that underpins blockchain “could get left behind”.
Pegasystems director and industry principal of financial services Graham Lloyd says that while many are still working out whether this impact will be positive or negative, there’s no time for complacency.
“For many, the jury is still out on whether or not blockchain will be a force for good or not,” says Lloyd. However, we do know there’s no longer room to be complacent about such a potentially significant source of disruption.
“Banks and insurers must prepare themselves for the day when they might have to manage blockchain-stored customer data – whether it be their personal information, details of their assets, or even real-time data from virtual currencies.
He warns that financial institutions need to be prepared to handle blockchain data belonging to their customers in the future or risk getting left behind.
With 35% of those polled saying they have “never heard” of blockchain and even 23% of those who have heard of it saying they don’t understand the technology, it’s clear the industry needs education.
“To do this, they will need to take the time to understand blockchain and how this emerging technology could affect them moving forward. The earlier this technology is understood at the highest levels of the business, the sooner organisations will be able to develop strategies to mitigate risk and harness the power of digital transformation.
“The smart players are those who already have teams dedicated to exploring this new technology.”
In terms of where specifically blockchain is expected to disrupt financial services, 53% of those polled believe clearing and settlement markets would be significantly disrupted by the technology. Meanwhile, 36% say they expect blockchain to disrupt the current account market. Some 45% think blockchain wallets combined with peer-to-peer lending could lead to “the end of banking as we know it”.
The study included a survey of 500 financial services organisations and executives across 56 countries.
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The industry needs to digitise its core businesses, cuts costs and create increased shareholder value, concludes a report from Oliver Wyman.