More than 80% of bankers anticipate the industry adoption of Blockchain by the end of the decade, as study from consultancy firm Infosys and its technology arm Infosys Finacle has found
Blockchain is a digital ledger of transactions. Instead of everyone keeping their own records, it is mutual, with everyone involved sharing the same ledger of transactions. It operates by consensus, so if all parties agree that a transaction is legitimate, it is then added to the chain and cannot be altered after the fact.
Already, more than 50 major banks worldwide including Citi, JP Morgan, BNP Paribas, Deutsche Bank and HSBC have banded together in a group called R3 CVE to test the technology.
For auditors, it could potentially make verifying the legitimacy of transactions far simpler and help flag up unusual activity, a subject CCH Daily is to explore next week in an in-depth feature.
The aim of the study, which included a survey of more than 100 financial services professionals from 75 institutes, was to understand the sentiment toward Blockchain technology, Infosys Financle said.
A third of respondents expect to see commercial Blockchain adoption by 2018, while a majority (nearly 50%) see mainstream adoption by 2020.
According to the survey, the average investment in Blockchain projects in 2017 is expected to be about $1m (£803,000).
The Majority of banks, about 69%, are experimenting with permissioned Blockchains. This means not everybody on the Blockchain can make transactions and not everybody has access to the ledger and, as such has more restrictions than public ledgers such as that used by Bitcoin.
Approximately 50% of the banks are either working with a FinTech start-up or technology company to augment their Blockchain capabilities, while another 30% are opting for the consortium model.
The study suggests that the Blockchain roll out would be prioritised in business areas where it can significantly improve transparency, automate processes across enterprises as well as reduce settlement and transaction time.
The study further revealed that the top five use cases that are expected to go to production are: cross border payments, digital identity management, clearing and settlement, letter of credit process and syndication of loans. These use cases scored more than 3.2 on a scale of one to five, with one being the least prioritised use case for commercial adoption and five being most prioritised.
The study from Infosys Finacle can be read here.
Calum Fuller is assistant editor of Accountancy
