Two new IBM studies show banks and financial market leaders look to blockchain to create new business models and anticipate disruption
The new IBM study, “Leading the Pack in Blockchain Banking: Trailblazers Set the Pace(1)” is based on a survey of 200 global banks. A second new IBM study, “Blockchain Rewires Financial Markets: Trailblazers Take the Lead (2),” is based on a survey of 200 global financial markets institutions.
Conducted by the IBM Institute for Business Value (IBV), the banking study revealed that more than 70 percent of trailblazers surveyed, or early adopters, are prioritizing blockchain efforts in order to break down current barriers to creating new business models and reaching new markets. These trailblazers are better positioned to defend themselves against competitors, including those untraditional disruptors like startup non-banks. For financial markets institutions, seven out of 10 trailblazers surveyed are focusing their blockchain efforts on four areas: clearing and settlement, wholesale payments, equity and debt issuance, and reference data.
“There are many advantages to being an early adopter of blockchain technology,” said Likhit Wagle, Global Industry General Manager, IBM Banking and Financial Markets. “To start, first movers are setting business standards and creating new models that will be used by future adopters of blockchain technology. We’re also finding that these early adopters are better able to anticipate disruption, fighting off new competitors along the way.”
Based upon the new IBM study, larger banks are defying industry expectations and are leading the charge to embrace blockchain technology with trailblazers being twice as likely to be large institutions with more than a hundred thousand employees — not small start-ups or FinTech organizations. Additionally, 77 percent of these larger banks are retail banking organizations.
Trailblazers expect the benefits from blockchain technology to impact several business areas, including reference data (83 percent), retail payments (80 percent) and consumer lending (79 percent). When asked which blockchain-based new business models could emerge, 80 percent of banks surveyed identified trade finance, corporate lending and reference data as having the greatest potential.
Keys to Success: Banking trailblazers view blockchains as a means to create new business models and access new markets, yet, outside of early adopters, banks feel there are many barriers to success when adopting blockchain. According to those surveyed, the top barriers to success include regulatory constraints (56 percent), immature technology (54 percent) and lack of clear return on investment (52 percent).