According to a recent survey including 500 global banking and insurance officials by Pegasystems, Cognizant, and Marketforce, blockchain is touted to be the most significant technological innovation since the Internet. But the divide between those ready for its rise and those who might be left behind is fairly significant.
Once this distributed ledger technology becomes mainstream, almost all aspects of the financial services chain will be impacted. But in comparison with front-end retail, back-end clearing and settlement will be more affected.
Blockchain is still distant to some. Respondents confessed they were unaware if their organizations were conducting research (46 per cent), formed a working group (69 per cent), formulated a strategy (83 per cent), were collaborating (80 per cent) or had dedicated teams working on blockchain (84 per cent).
Even though almost a third of the respondents who are aware of this technology feel that it cannot get bigger than the Internet, this feeling might change significantly considering that this technology is still in blooming.
Following the examples of these few in the industry, 31 per cent of the respondents are forming working groups, 20 per cent are partnering with a fintech specialist, while 54 per cent are saying their organization is researching the potential impact of blockchain.
Blockchain eliminates the need for a third party intervention. Hence blockchain wallets, where consumers can hold most of their financial assets on the blockchain, could become a threat for retail banks. Millennials have already shown keen interest in P2P models, implying that blockchain wallets could be a possibility.
With the above figures, the banking sector has to wait and watch if blockchain will be a reason for the demise of traditional modes of banking.
Insurers have always found claims to be one of the most difficult part of insurance. This process may very well benefit from IoT, blockchain, and smart contracts. For example, drawing on data from IoT to validate a claim could autotrigger claim filing, which is then promptly settled via a smart contract on the blockchain.
In a world where no one is safe from cyber attacks and hackers, blockchain could just be the saviour for every individual whose personal data is placed in centralized servers. Consumers are thus likely to welcome a technology that would no longer leave them vulnerable to such attacks.