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Blockchain will not solve all your problems
- 80 percent of industry professionals anticipate the technology will be operational within 6 years.
- Almost a majority of market participants expect blockchain to address system failure risk.
Away from the fanfare of cryptocurrency, bankers show optimism towards blockchain technologies. Many pundits, panels and surveys show the technology is top of mind for the industry.
However, the general enthusiasm looks more like part of a zeitgeist rather than a systematic approach to exploration and implementation.
In their basic functions, banks are big books that record information: who has how much, who paid whom, who owes whom and how much, was the deal completed and the like. Banks spend a lot of time and money making sure that if I move money from Bank A to Bank B, the big books of both banks are up to date and show the correct information.
With blockchain, bank A and bank B will have access to the same big book that updates in real time. This, of course, can streamline a lot of a bank's work. Blockchain technology can also be applied inside Bank A to streamline internal operations.
This, of course, is exciting and industry insiders expect the technology to mature soon. 80 percent of market participants anticipate the technology will be operational in the next 6 years, according to a market trends survey by Deutsche Bank published last week.
Respondents were also asked to name the IT risks blockchain is most likely to help, resulting in the following list:
- System failure and market disruption (48 percent)
- Increasing regulatory requirements (36 percent)
- Legacy IT (36 percent)
- Inadvertent data disclosure (36 percent)
- Cybersecurity (31 percent)