The hype for blockchain is over and real world results must now be achieved, according to TABB Group’s latest research, “Demystifying Blockchain.”
The report details how a clearer vision and execution path for blockchain is emerging, but that the technology is only a piece of the puzzle for a next generation data solution.
“There have been dozens of conferences, tens of thousands of words written, multiple consortiums created and many experiments conducted in blockchain over the course of the last 18 months and what have we learned?” asks TABB principal and head of fintech research Terry Roche (pictured), who authored the report. “At its core, we know blockchain is a next generation data architecture that has the ability to completely transform the post-trade settlement and reconciliation space and bring significant cost savings to the industry.”
According to TABB, IT spend within capital markets exceeds USD85 billion annually and a multi-billion dollar cost reduction is a reasonable expectation if the industry can effectively implement a blockchain architecture. However, there are first numerous foundational challenges to be resolved in order for blockchain benefits to become a reality and that includes moving much if not all of the post-trade validation work to the pre-trade space.
Roche further explains that ultimately blockchain requires a network of entities to collaborate within a standardised structure to enable a distributed ledger and commonly understood and validated truth in data. Building a strong network of community adoption is fundamental. Though blockchain is itself a transformational technology, it will likely only be achieved through a network effect of iterations by existing players working together.
