The financial services industry is spending about $1.7 billion per year on blockchain, as banks and other firms move beyond the proof-of-concept stage and start rolling out commercial distributed ledger technology (DLT) products.
That’s a conclusion of a new report by Greenwich Associates that is based on more than 200 interviews with market participants covering blockchain budgets, team sizes, use case exploration, key challenges and other issues.
Greenwich previously reported that the financial industry spent about $1 billion on blockchain in 2016.
The latest results show that blockchain budgets increased 67 percent last year, with one in 10 of the banks and other companies now reporting blockchain budgets in excess of $10,000,000.
Headcount dedicated to blockchain initiatives doubled in 2017, as banks and other firms launched new proof-of-concept projects or shifted top product implementation. The typical top tier bank now has about 18 full-time employees working on the technology.
Fourteen percent of the banks and other financial companies in the study claim to have successfully deployed a production blockchain product. Payments and trade finance are the businesses targeted most frequently.
Cost reduction has emerged as the biggest driver of blockchain investment and development for financial service firms.
DLT has been a top focus for financial services firms for the last few years. However, product development has been unable to keep up with the hype, according to Greenwich analysts.
“More than half the executives we interviewed told us that implementing DLT was harder than they expected,” says Richard Johnson, vice president of Greenwich Associates Market Structure and Technology practice and author of the new report, Blockchain Adoption in Capital Markets—2018.
Nevertheless, he said, they expect more than three-quarters of projects currently under development to be live within two years.
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