It may have had a slow start, but 2020 has been the year we’ve really seen the true potential of blockchain. The true benchmark is in the implementation of real-life deployments, be that in the form of blockchain start-ups or new infrastructure projects. Only then can blockchain’s true value to the financial industry be measured. Sure enough, 2020, despite its unprecedented challenges, has heralded a new dawn for blockchain.
Nevertheless, the slow uptake of blockchain adoption isn’t unusual due to the fact that its value lies in highly regulated, complex markets, such as the financial services industry. It would be unfair to compare adoption to the rise of cloud, Internet of Things and AI, simply because blockchain is suited for complex, collaborative, multi-party, and critical application use-cases.
We are seeing an increase in optimism of blockchain in the financial industry, particularly in the enterprise space, with customers truly seeing the practical purposes in deployment, leading to more investment in time and money in blockchain. Gartner predicts that blockchain will be fully scalable by 2023. IPC’s sense of the future of blockchain, particularly in the enterprise space, is just as positive.
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Next-generation blockchain organisations are leading the way in showing how the technology can be used intelligently for the world we live in today. For example, R3, an enterprise software company, is working with an ecosystem of over 200 financial institutions, regulators, trade associations, professional services and technology companies to develop Corda. This is a blockchain platform designed specifically for businesses to deliver two interoperable and fully compatible distributions of the platform which addresses issues such as transactional certainty, data privacy, and the scalability limitations.
Both application service providers and subscribers should partner with respective service and product providers at an operational level, prioritising integration to stay ahead of the blockchain curve. Real value is provided with the integration and support from the hyper-scale platform community such as Microsoft Azure and AWS together with open industry platforms, such as IPC’s Connexus Hub, creating end-to-end solutions that solve business problems. The importance here is APIs. We believe in an API partner integration approach, which gives institutions the ability to easily access data, provide insights and inspire innovation for the company/market need.
Service providers, like IPC, can play a critical role here by supporting operationalisation in the systems-oriented context. Such providers are a natural connector embedding connectivity to key market participants. IPC, for example, has access to all asset classes and trading methods with over 2,000 sell-side, 4,000 buy-side and over 75 exchanges.
The new paradigm
Covid-19 has provided unprecedented circumstances and situations that has impacted every aspect of our lives. Though this pandemic is devastating from a health, societal and economic perspective, blockchain may help the global economy rebound. The World Economic Forum believes technology such as blockchain “will benefit all countries currently impacted by Covid-19”, as it provides an efficient approach to reduce trade cost on a global scale.
Digitisation accelerated by Covid-19 will change the insurance industry forever
Digital initiatives such as blockchain is non-partisan and open to all, which allows users to act quickly at low cost with low barriers for innovation — all valuable factors in supporting the economy in an economic downturn. So, although blockchain adoption was slow in its early stage, 2020 seems to be the year blockchain comes of age.