The growing number of banks and FinTechs taking to blockchain technology has caught the attention of the financial services world, with the industry readying to offer its own customers — both corporate and consumer — blockchain-based solutions.
But how are the corporates themselves preparing for this disruption?
A new report from Juniper Research suggests large enterprises are eager to participate in the evolution of blockchain adoption, with 57 percent of surveyed corporates actively considering or deploying blockchain technology.
In speaking with 400 corporate founders, IT professionals, executives and managers, Juniper Research concluded businesses themselves are making progress when it comes to turning blockchain-based tools into reality. Two-thirds of companies that have reached the proof-of-concept stage said they expect to have these tools integrated into their systems by the end of next year.
The firm’s Blockchain Enterprise Survey also found that settlement, land registry and digital fiat currency — a digital currency issued by central banks — are prime opportunities in which corporates can deploy blockchain tools.
Companies that stand to gain the most from blockchain include those currently lacking transparency and clarity in their transactions, those still dependent on paper-based systems and those handling large volumes of transmitted information, according to Juniper Research.
But according to research author Windsor Holden, Ph.D., corporates must consider alternative options to improving their systems before going straight for blockchain.
“In many cases, systemic change, rather than technological, might be a better and cheaper solution than blockchain, which could potentially cause significant internal and external disruption,” Holden stated.
FinServ’s Focus Continues
While corporates would be wise to take into consideration the potential disruption blockchain may have on their operations — both positive and negative — the financial services industry, too, is weighing those threats.
A separate report recently released by Cognizant, Financial Services: Building Blockchain One Block at a Time, highlighted the ongoing fragmentation of a still-maturing blockchain ecosystem. FinServ companies today continue to test the technology within the confines of their corporate walls, while businesses develop proofs of concept and focus on understanding the tool.
But unlike Juniper Research’s recommendation that corporates should consider alternative changes to the enterprise before deploying blockchain technologies, Cognizant is urging the financial services space to act quickly — and aggressively — to deploy blockchain tools.
A survey of 1,520 executives at 578 FinServ companies found the industry understands the waves of change headed its way thanks to blockchain. According to the report, 91 percent of respondents said blockchain will be either critical or important to the future of their companies, and nearly half said it was likely to “fundamentally transform the industry.”
Professionals say blockchain will lead to boosted competitive advantages, with most expecting revenue increases of at least 5 percent as a result of adopting blockchain solutions.
And while Juniper Research warns corporates that uncertainty over the future of blockchain could lead to negative disruptions for the enterprise, Cognizant says the financial services space should expect such uncertainty and move forward nonetheless.
“Most firms are drastically underestimating the significant changes this will require in their existing culture and assumptions, and only 6 percent of respondents cited culture and change management as a significant obstacle,” Cognizant warned. “Firms need to develop a ‘network-first’ mindset and embrace the idea that it can be more important to grow the size of the market than just their own slice of the pie.”
Its researchers encouraged the FinServ market to embrace collaboration as part of this initiative.
Cognizant may be encouraging financial services providers to not only get ready for the disruption of blockchain, but to embrace it. Juniper Research, on the other hand, says corporates should perhaps let the financial services space bear the bulk of that disruption head-on, and consider alternatives to blockchain technologies before enduring such an overhaul.
But Cognizant is also encouraging financial services providers to be cautious with blockchain disruption.
“In the short term, it’s good enough to modify, not overhaul, business processes and technology systems,” the report concluded. “Over the longer term, the greatest benefits will be captured by firms that redesign their business processes and technology systems to take best advantage of blockchain capabilities. But, in the near term, most firms are assessing how to modify their existing processes and systems to support blockchain.”