The road ahead
Real-world applications. There are lots of promising blockchain applications across financial services. For example, we’ve estimated that blockchain could create the opportunity to save between US$5 billion and $10 billion in reinsurance. This is possible because of improvements to placement, claims settlement, and compliance checks. We’re also seeing interesting activity in areas like clearing and settlement, trade finance, and mortgages. In the coming year, many firms hope to move from PoC to production to demonstrate immediate value. But to do this, they’ll have to move beyond seemingly endless debates about how to untangle complex, legacy infrastructure.
Now, the hard part. After making some fairly big bets on the technology, firms should think more broadly about how to put it to work. Behind the scenes, there are technical issues being addressed: resolving communications and programming issues, data privacy and security concerns, regulatory concerns, standardizing the communications protocol, and so on. But for financial institutions, many of the most challenging issues aren’t technical at all. Rather, they’ll struggle to address items such as governance, standards, and “off-ramps” to other systems.