Banking on the blockchain revolution

Banking on the blockchain revolution

Blockchain has rapidly shifted from a technology used by the finance industry to many more sectors including energy, property, healthcare and manufacturing. The online distributed ledger technology has even been described as the “new internet” in some quarters.

Some leaders have so far managed to largely ignore it but fear of being left behind is now setting in. According to research carried out by professional services firm, PwC, four fifths of executives surveyed report that they have blockchain initiatives underway.

Blockchain is here. What’s your next move? surveyed 600 executives in 15 countries and territories, on their development and views on its potential. PwC describes blockchain as “rewiring” business and commerce and reckons the research provides one of the clearest signals yet of organisations’ fear of being left behind. The study highlights how developments are accelerating globally and opening up opportunities including reduced costs, greater speed and more transparency and traceability.

One quarter of executives report a blockchain implementation pilot in progress (10 per cent) or fully live (15 per cent) and a third (32 per cent) have projects in development while a fifth are in research mode.

The US is the clear leader at the moment (29 per cent), but within three- to five years, respondents believe China (currently 18 per cent) will have overtaken the US. In terms of sectors, financial services is dominant but others identified with emerging potential include energy and utilities, healthcare and industrial manufacturing.

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“What business executives tell us is that no-one wants to be left behind by blockchain, even if at this early stage of its development, concerns on trust and regulation remain,” says Steve Davies, blockchain leader, PwC. “A well-designed blockchain doesn’t just cut out intermediaries, it reduces costs, increases speed, reach, transparency and traceability for many business processes. The business case can be compelling, if organisations understand what their end game is in using the technology, and match that to their design.”

While Davies is correct that the business benefits of are compelling, it doesn’t necessarily spell good news for everyone. Cost-savings and increased speed come at the expense of the middle man as blockchain can eliminate intermediaries and this represents a significant amount of businesses in some sectors. For example, with blockchain-based recruitment solutions now appearing, the recruitment agency sector is one of those that is having to sit up and take notice of the technology and assess how it might affect their business models. Other sectors could be similarly hit.

Nonetheless, the benefits and scale of change that blockchain brings are enormous and cannot be ignored by business leaders in any sector. Even if your company is not directly impacted yet, chances are those in your supply chain are or your business partners could be. Like many of the complex technologies that are emerging, organisations must avoid taking a silo approach to its implementation.

PwC rightly points out that blockchain’s biggest benefits will be developed and delivered through “shared industry wide platforms” and the study notes that this won’t happen without industry specific companies – including competitors – agreeing “common standards and operating together”.

Rialto is a strong believer in the power of the ecosystem and partnership working. And there is no doubt that collaborative working and leadership is required to extract maximum benefit from not just blockchain but many of the technologies that are central to the Fourth Industrial Revolution, such as artificial intelligence and machine learning.

No single company can yet have all the answers when it comes to blockchain. But with vast new processes, business models and services out there waiting to be invented using these technologies, leaders must make certain they have the right knowledge, expertise and intelligence in place to maximise the benefits when they are implemented.

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