U.S. IT giant IBM said on Wednesday that with 15 percent of top global banks intending to roll out full-scale, commercial blockchain products in 2017, the recent trend in the banking technology segment is that banks and other financial institutions are fast adopting blockchain technology at “dramatically faster” rates compared to what was initially expected.
While larger banks – those with more than 100,000 employees – are leading the charge in the adoption of the blockcahain technology among the gang of global banks and financial institutions of which 65 percent of banks expected to have blockchain projects in production in three years’ time, the U.S. technology company said.
Clearing and settlement, wholesale payments, equity and debt issuance and reference data were the areas of banking and financial services that have been commonly identified by lenders as ripe for blockchain-based innovation segments, said IBM, whose findings were based on a survey of 200 banks across the world.
An electronic transaction-processing system and a record-keeping system that allows all parties to track information through a secure network, with no need for third-party verification is termed as Blockchain and this technology originates from digital currency bitcoin.
Widespread financial adoption of the technology has been thought to be at least 5 to 10 years away even as almost every major bank has said it is looking into the technology intently and contemplating using the blockchian technology. It would take at least a decade for blockchain to overhaul core parts of the financial industry, said a report that was published in February by consultancy Oliver Wyman.
“The industry is hurtling toward blockchain adoption far faster than many expected,” IBM said in its report. “2017 looks to be the year banking on blockchains shifts from zero to sixty,” the report added.
14 percent of other global financial markets institutions intended to implement commercial blockchain products in 2017, the IBM report also found out as it also conducted a separate survey of 200 other global financial markets institutions.
“First movers are setting business standards and creating new models that will be used by future adopters of blockchain technology,” said IBM Banking and Financial Markets general manager Likhit Wagle.
“These early adopters are better able to anticipate disruption, fighting off new competitors along the way,” Wagle added.
Aiming to create a framework that could eventually be sold to other businesses, Microsoft and Bank of America Merrill Lynch had teamed up on a new project using blockchain in trade finance, both the companies announced on Tuesday.
Including a project with currency settlement system CLS to develop a new payment netting service, IBM also said it had announced several new blockchain ventures at this week’s Sibos financial conference in Geneva.
(Adapted from Reuters)