A new study by Greenwich Associates suggests that in 2016 financial firms and technology providers will escalate their efforts to bring blockchain to capital markets. The investments are to grow accordingly.
The study, authored by Richard Johnson, Vice President in Greenwich Associates Market Structure and Technology group, is dedicated to the “current state of blockchain adoption across banks, brokers, asset managers, exchanges, and technology vendors” and “the opinion of the leading blockchain technology companies.”
It is based on 134 interviews with global market participants working with the blockchain technology, from all kinds of organisations. The absolute majority of respondents were actively involved in blockchain initiatives and more than a half were key decision-makers. According to Richard Johnson,
“A majority of the financial service firms and technology providers we interviewed are convinced blockchain will enable meaningful change across capital markets within five years.”
The study shows there is a race to develop and adopt the blockchain technology, with important amounts of money being spent on related projects. 32% of the companies working with distributed ledger have a budget of more than $5 million per year, and additional 15% spend between $2 and $5 million. This enables Richard Johnson to predict that the total amount of investment in blockchain will exceed $1 billion in 2016. The movement towards the blockchain is led by banks, brokers, exchanges and central counterparties (CCPs) while many asset managers prefer “a more wait-and-see approach.”
Most of the respondents believe that the blockchain adoption is slowed down by vested interests in existing systems. From their point of view, the distributed ledger can reduce costs and streamline the operations. They believe payments are the most promising potential application for the blockchain.
“Additionally, study participants say a move to DLT (distributed ledger technologies – A.T.) in capital markets could add unquantifiable benefits, such as providing a catalyst for industry transformation, creating new value chains and new markets, and improving regulatory compliance, transparency, and information sharing,” says Richard Johnson.
Greenwich Associates, LLC is a leading global provider of market intelligence and advisory services to the financial industry. It offers consulting services in the areas of banking, equity and capital markets, insurance, fixed income, currencies and commodities, securities and trading, and investment management.
Alexey Tereshchenko
