Leaders in financial services gaining faith in blockchain

02 September 2021 Consultancy.uk 4 min. read
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The vast majority of financial services leaders now see blockchain as a potential source of competitive advantage. Among firms who have already adopted blockchain into their business processes, 70% said they believed it could open up access to new sources of funding, among other benefits.

After rising to prominence as the technology underpinning Bitcoin, blockchain initially made its presence felt in the financial sector. Following that, early hype saw it make waves in the freight and logistics industry, while clients in every sector from insurance to retail began pressing consultants for advice on how to exploit, or defend themselves, from its disruptive impact. While blockchain boasted a number of clear gains, regulatory uncertainty and trust remained barriers to wider business adoption – leaving the technology’s advances somewhat muted.

However, in the last year, everything has changed for blockchain. The proliferation of all things digital into the assets and financial services business has been notably accelerated by the Covid-19 pandemic. An increasing emphasis on managing sensitive work from home means blockchain looks to finally have come of age amid the coronavirus crisis.

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With blockchain providing a secure digital method of exchanging and storing value, the global financial services industry in particular has undergone a seismic shift – adopting the technology much fast than before. According to Deloitte’s 2021 Global Blockchain Survey, global FSI leaders – who were the first to recognise the potential of the technology – have now highlighted it as a strategic priority. Around eight-out-of-ten said that digital assets would be important to their respective industries over the coming 24 months.

Deloitte polled a sample of 1,280 senior executives and practitioners in Brazil, China, Germany, Hong Kong, Japan, Singapore, South Africa, the UAE, the US and the UK. Among this representative group, 80% of leaders said their industry would see new revenue streams from blockchain, digital assets and/or cryptocurrency solutions. At the same time, 77% said they would lose an opportunity to gain competitive advantage if they did not position themselves correctly now.

Leaders of the leaders

As might be expected of the sector where blockchain first captured the imaginations of executives, these figures are higher than among the world’s overall markets. However, among FSI pioneers, the numbers of leaders making blockchain a priority is even greater. FSI pioneers are firms who have already deployed blockchain solutions in their core business activities. Even so, they insist upon maintaining digital assets and blockchain as a top-five strategic priority. This is exemplified by 97% stating their organisation would lose a competitive advantage if it does not treat blockchain as a top goal.

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FSI pioneers are also ahead of the curve in recognising what benefits blockchain provides. While broadly, business leaders in and out of the FSI sector know blockchain can provide more efficient, regulatory compliant and trust-worthy transactions, fewer were aware of the potential it has for providing access to new income. Among FSI pioneers, 53% thought blockchain could open up new revenue streams, while 70% said it could provide new funding sources – such as decentralised finance platforms. In contrast, only around four-in-ten business leaders elsewhere felt the same.

This gap is further demonstrated by FSI pioneers’ heightened awareness of how digital assets can be deployed within their firm. A majority of 63% of pioneers expected digital assets will provide new payment channels or types, compared to just over 40% of everyone else. Meanwhile, 54% of pioneers believed digital assets could provide digital representations of financial instruments or products – with under 40% of the global market expecting the same. Others are likely to gain ground on pioneers in the coming months, however.

Concluding, Deloitte’s paper said, “FSI is still coming to grips with the potential implications of digital currencies. The vast majority of leaders in our survey still see blockchain and digital assets as another way to gain competitive advantage. The unprecedented speed at which infrastructure develops and the constant need for flexibility are spurring many industries to adapt to find their way in this new era of digital assets.”