A new survey from Greenwich Associates has estimated that financial service firms and technology providers across the globe will spend over $1 billion in 2016 in order to bring blockchain to capital markets.
In March and April 2016 Greenwich Associates interviewed 134 market participants working on blockchain technology. It assessed the current state of blockchain adoption across banks, brokers, asset managers, exchanges, and leading blockchain technology companies.
The results of that research are presented in the new Greenwich Report Blockchain Adoption in Capital Markets, authored by Richard Johnson, Vice President in Greenwich Associates Market Structure and Technology group.
“A majority of the financial service firms and technology providers we interviewed are convinced blockchain will enable meaningful change across capital markets within five years,” Johnson said.
The results reveal that significant resources are being spent on the development and adoption of the technology, with banks, brokers, exchanges, and central counterparties (CCPs) taking the lead. Several asset managers are taking a more wait-and-see approach.
Among firms that have some ongoing blockchain initiatives, 32% have an annual budget in excess of $5 million per year, and a further 15% have budgets in excess of $2 million. Projected across the entire financial services industry, that level of spending will likely top $1 billion in 2016.
A majority of study participants believe blockchain has significant potential to reduce operational costs and shorten settlement times and rank payments as the most promising area for blockchain application. In addition, they see vested interests in legacy technology systems as the main obstacle to blockchain adoption.
“Additionally, study participants say a move to DLT in capital markets could add unquantifiable benefits, such as providing a catalyst for industry transformation, creating new value chains and new markets, and improving regulatory compliance, transparency, and information sharing,” says Johnson.
Greenwich Associates is the leading global provider of market intelligence and advisory services to the financial services industry. It currently serves clients across three coverage areas including markets, banking and investment management, and specializes in providing fact-based insights and practical recommendations to improve business results.
