A new study from the United States has revealed that the financial services industry is spending about $1.7 billion per year on blockchain technology. This investment comes as banks and other firms move beyond the proof-of-concept stage and start rolling out commercial distributed ledger technology (DLT) products.
According to the report by Greenwich Associates, blockchain budgets increased 67% last year, with one in ten of the banks and other companies now reporting blockchain budgets in excess of $10,000,000.
In addition, headcount dedicated to blockchain initiatives doubled in 2017, as banks and other firms launched new proof-of-concept projects or shifted top product implementation. The typical top tier bank now has about 18 full-time employees working on the technology.
Fourteen percent of the banks and other companies in the study claim to have successfully deployed a production blockchain solution. Payments and trade finance are the businesses targeted most frequently. Although early tests showed the potential of DLT across a range of important functions like creating revenue opportunities, shortening settlement time, and reducing risk and cost of capital, cost reduction has emerged as the biggest driver of blockchain investment and development for financial service firms.
“More than half the executives we interviewed told us that implementing DLT was harder than they expected,” says Richard Johnson, author of the report. “Nevertheless, more than three-quarters of projects currently under development are expected to be live within two years.”
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