Other areas have a lot of opportunities to expand on the original FS experience and use blockchain technology for a wide variety of business operations and transactions.
- Blockchain may be the most talked about but least understood technology changing contemporary society.
- Although blockchain technology solution providers are not currently the main DLT client category, several are researching DLT to enhance and augment their product offerings.
- To reap the benefits of blockchain technology, executives must analyze the possible effect on their businesses and test and learn.
Blockchain technology has recently changed how the financial services (FS) industry approaches payment transactions. The resultant knowledge now applies to many additional proof-of-concept initiatives.
Other areas have a lot of opportunities to grow on the original FS experience and use blockchain for a wide variety of business operations and transactions. For some firms, this might mean increasing process efficiency. Others may need a thorough reimagining of existing business paradigms.
Read: The rise of a new dawn: Blockchain technology adoption in Africa
The degree of attention, activity, and investment presently observed across the financial services and other sectors is a strong sign of conviction in the promise of blockchain technology. However, it is unclear where and when genuinely revolutionary effects will be evident.
How blockchain works
Blockchain may be the most talked about but least understood technology changing contemporary society. According to a recent worldwide poll, 80% of individuals who had heard of blockchain confessed to not knowing what it works.
Numerous people who believe they understand blockchain do so primarily in relation to bitcoin. Bitcoin remains the most notable of many rising cryptocurrencies that are shaking up the financial world. Because blockchain technology offers a transaction platform for securely recording bitcoin transactions from one party to another, the two are sometimes confused.
It is hardly unexpected that blockchain remains associated with financial technologies. However, blockchain will have far-reaching repercussions that extend well beyond finance. Multinational corporations, for example, are investigating using blockchain to establish more efficient, transparent, and sustainable global supply chains. DLT remain under research in the pharmaceutical industry to provide transparent clinical trials of novel medications. Furthermore, a blockchain approach to auditing and corporate reporting might improve the accounting business. Every industry that relies on trust inside the organization, partners and suppliers has the potential to enhance its operations via blockchain.
The wave of blockchain and Distributed Ledger Technology (DLT) adoption
Cambridge University’s Centre for Alternative Finance assessed over 200 blockchain infrastructure providers, application developers, service providers, and operators from various industrial sectors to help measure the rising impact of the blockchain (and DLT in general) inside businesses. The results revealed that, although the financial industry remains at the forefront of DLT innovation, other sectors are catching up.
When asked what types of firms are utilizing DLT, suppliers verified that numerous industries and subsectors are already active customers. More than a third indicated they had clients who were regulators or government entities, demonstrating blockchain’s utility in the public sector. One-quarter of buyers were private people, while almost a fifth were creative artists. DLT applications are being tested or used by many clients, including energy corporations, title and real estate businesses, airlines, shops, hospitals, and health care organizations.
Given the breadth of DLT’s potential uses, it’s not unexpected that the blockchain technology sector has made significant investments in developing generic frameworks and structures adaptable to various projects in various industries. Some business DLT frameworks have had over 20,000 downloads. However, two-thirds of research participants said they focused on building sector-specific solutions tailored to address specific use cases.
Although blockchain technology solution providers are not currently the main DLT client category, several are researching DLT to enhance and augment their product offerings. System integrators, Internet of Things (IoT) organizations, and know your customer (KYC) regulatory professionals are all experimenting with DLT platforms.
The research examined 132 distinct DLT business case studies across all industries from the perspective of corporate users.
While 30% of usage links financial and banking services, it is noteworthy that the government sector has been more aggressive in proof-of-concept initiatives than several private business sectors, including insurance, health care, media, entertainment, and gaming.
Read: Blockchain: A pathway towards sustainable development in Africa
The usage of blockchain and DLT
Given blockchain’s link with payments, cryptocurrencies, banking services, and financial services, these are the industries where most DLT activity is now taking place. Regarding the number of extant DLT initiatives, capital markets dominate, but insurance and trade finance are also vulnerable to disruption.
More than half of blockchain service providers focus on regulatory compliance and audit use cases. A comparable number has concentrated on digital identification, while others have concentrated on the health care and public sectors. Furthermore, almost 40% of providers are now using blockchain to enhance the supply chain – a ratio that will undoubtedly rise as the technology becomes more widely used.
The time is ripe for anyone to adopt blockchain and DLT in general
The advent of blockchain started as a platform for a monetary payment solution. The technology was gradually adopted by many other sections of the financial industry. This progress, both technologically and culturally, has elevated FS to the forefront of DLT exploration. So, what should a company consider to get the most out of DLT?
It is essential to understand that success does not come immediately. FS has discovered how DLT may enhance current transactional operations via proof-of-concept experiments. However, large-scale manufacturing utilization remains restricted.
However, confidence comes from experimenting. The common expertise in running proof-of-concept initiatives enabled infrastructure providers, application developers, and operators to collaborate on developing DLT to solve a variety of industrial demands.
As a result, consumers and service providers must remain open to the potential of DLT. It would have been simple to see blockchain in monetary transactions, but FS has applied DLT thinking across various tasks, enhancing its use in the industry.
It has been nearly a decade since blockchain’s introduction to the corporate world. The breadth and depth of DLT experiments highlight how effective this new method of assuring transactional trust, authenticity, and accountability might be across all sectors. The financial services industry remains at the forefront. Despite its promise, the technology has a long way to go before reaching full maturity and widespread acceptance.
As awareness of this emergent technology increases, the time has come to consider how it could be most useful in transforming modern businesses. To reap the benefits of blockchain technology, executives must analyze the possible effect on their businesses and test and learn.