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Banks are slowly coming around to the idea of blockchain technology compared to what many previously thought several years ago. Yet, while banks are keen to explore the technology integration and collaboration remain its biggest hurdles.
In a report from the American Banker, it looked at how far the blockchain has grown over the last two to three years, as such surpassing peoples’ expectations as to how soon the technology will be adopted by banks.
Last September, it was reported that asset managers predicted that the blockchain would be adopted by 2021 with 45 percent of 2,000 investors and 500 wealth firms stating they are already exploring the technology and a further 64 percent expect to expand on it within the next five years.
Yet, due to the hype surrounding the technology 2016 witnessed blockchain prototypes being tested and trialed. However, according to an IBM study, 2017 is the year when banks will start putting blockchain solutions into implementation.
This can already be seen through a consortium of 47 Japanese banks after they recently completed a pilot implementation of Ripple’s blockchain technology to enable real-time domestic and international money transfers.
South Korea’s Financial Services Commission (FSC) has revealed that it plans to launch a blockchain pilot project for financial services this year. The announcement of which comes a month after the country’s first blockchain consortium.
According to Jeong Eun-bo, FSC vice chairman:
South Korea has the world’s top-level ICT [and] it will be able to lead the international trend in the blockchain sector if the government, related industries and experts pool their wisdom.
Government Support for Permissioned Blockchain
Last spring, IBM presented a speech in New York where they urged the support for permissioned blockchains where industries and government agencies exploring the technology in networks would be known to each other.
Banks are more likely to get on board with the technology when they know that those sharing the same network are there through invitation only.
And yet integration and collaboration remain key hurdles for banks when it comes to the technology’s adoption.
From a choice of data security, privacy, scalability, business case or integration, around half of the audience from a Depository Trust & Clearing Corporation (DTCC) gathering said integration was the greatest challenge, reports American Banker.
Chris Church, chief business development officer at Digital Asset Holdings added:
Interoperability is key: if you look at obvious challenges, privacy and scalability are solved. If you do get interoperability, which will require collaboration, all sorts of things become possible.
Featured image from Shutterstock.