New research of over 1,500 financial services executives from 578 firms worldwide reveals that blockchain will become a catalyst for change in financial services, with 91% claiming that its implementation and use will be critical or important to their firm’s future. The research from Cognizant, which forms part of the report, ‘Financial Services: Building Blockchain One Block at a Time’ highlights that while blockchain is poised to disrupt the financial services industry, firms face significant uncertainty about how the blockchain ecosystem will develop and the changes it will create.

Blockchain benefits are too great to ignore

Blockchain can dramatically boost efficiency and reduce cost: virtually all respondents (98%) expect it to save their firm money. In fact, around three-quarters predicted that their revenues will grow by more than 5% following its adoption. Blockchain is also expected to help address many of the industry’s biggest challenges with respondents citing improved data management (47%), transparency (46%), risk management (40%) and speed of digitisation (39%), as some of the major benefits. However, despite consensus amongst users that the complex algorithms ensure transaction data cannot be tampered with after verification, only 11% believe that blockchain will reduce fraud.

Blockchain will re-write the rules of competition in financial markets, and firms need to ensure their business strategies keep pace. Most respondents (90%) said their firm has identified or is currently identifying processes and functions that can be automated through the technology.

Businesses are optimistic, yet unprepared

Blockchain may be a relatively new technology, but almost half (48%) of respondents have a defined blockchain strategy in place, and 42% said they have identified processes and functions that could be transformed. However, an important barrier to adoption is understanding blockchain use cases, according to 53% of respondents. It is crucial that business stakeholders are involved from the outset to define the opportunities that blockchain can help bring.

Firms are underestimating collaboration needs

While a huge 94% of respondents do not believe culture and change management to be significant barriers to adoption of the technology, to see the real benefits of blockchain, they will need to participate in networks of partners, customers and competitors, rather than rely on internal solutions.

This will require a significant shift: they will need to develop a “network-first” mindset and embrace the idea that it can be more important to grow the size of the market than just their own slice of the pie. To spur this on, organisations should consider the ability to collaborate successfully when evaluating blockchain proofs of concept.

Lata Varghese, VP and Leader, Blockchain and Distributed Ledger Consulting Practice at Cognizant, explains: “From opening new markets, to increasing cross-selling opportunities and even creating entirely new business models, financial firms that move quickly on blockchain, realising the cost advantage while successfully providing added-value services, will triumph over their competition.”

“To see the substantial benefits blockchain can deliver, firms cannot afford to wait for the fragmented blockchain landscape to converge and business applications to become clearer. Businesses need to move aggressively need to re-evaluate their business models and face-up to the culture change required to collaborate with external partners in the business world of blockchain. Businesses that are slow to pick up on opportunities to apply blockchain to their business will find themselves left behind as the industry moves on without them.”