Following a recent report on the potential of blockchain technology, the World Economic Forum has, in conjunction with Deloitte, released another report - “Opportunities & obstacles: Blockchain and the future of financial infrastructure”. The report draws on over 12 months of research, engaging 200+ industry leaders and subject matter experts through interviews and multi-stakeholder workshops.
Giancarlo Bruno, Senior Director for Head of Financial Services Industries at the World Economic Forum, said: “Throughout the last 50 years, the financial services industry has embraced new technologies that now seem commonplace but were once cutting edge, including ATMs, credit cards, and electronic trading. In the same way, blockchain technology is moving from the margins of the finance industry to the main stage, and will continue to help build innovative solutions across the industry, becoming ever more integrated into the identity of financial services.”
According to the report, the industry is at a unique inflection point with great opportunity, as multiple technologies are set to drive the next wave of financial services innovation. It recommends that distributed ledger technology should be seen as a critical part of any successful financial services program. However, the report also points out key hurdles ahead of large scale implementation of blockchain.
Global Financial Services Industry leader at Deloitte Global, Bob Contri remarked: “Though technological innovation has been fundamental to industry transformation, there are other steps that will play a role in this disruption as well. Before full adoption is possible, there are factors that need to be addressed, including an uncertain regulatory environment, lack of standardization efforts, and the need for a formal legal framework,”
Other opinions of the report included the view that blockchain would be the foundation of next generation financial services infrastructure but that there was no all-encompassing solution. Instead, it is thought that applications of blockchain will differ by use case. Emerging capabilities are expected to deepen blockchain’s impact, with platforms such as Digital Identity1 and Digital Fiat2 able to amplify benefits and broaden the application of distributed ledger technology to new industries.
One key fact highlighted was that collaboration will yield the strongest progress. The most meaningful blockchain applications will require deep collaboration between incumbents, innovators and regulators, which unfortunately will add to the complexity and time required for the implementation of solutions.
Rob Galaski, partner with Deloitte Canada and team leader of Deloitte’s WEF’s Disruptive Innovation in Financial Services work, commented: “While there is no doubting the transformative potential of blockchain technology, it is not a blanket cure for inefficiency in Financial Services. At this stage of evolution, the critical task is knowing where to focus your efforts. Blockchain is expected to have the greatest impact when applied to business problems involving: a shared repository of information, multiple writers, minimal trust, the presence of intermediaries and interdependencies between transactions. Without these conditions, Blockchain may not be the answer.”
Project Lead for Disruptive Innovation in Financial Services at the World Economic Forum, Jesse McWaters explained: “The financial services infrastructure will be radically changed by blockchain technology, as it will re-draw processes and call into question policies that are the groundwork of today’s business models. Our research looks to the future state of blockchain technology, and by starting this conversation, we believe this will help further build perspective for what is to come.”