The jury is still out on what the precise impact of blockchain will have on the financial services sector. Whereas some are suggesting it will be a force for good, others believe it could completely change the way these organisations operate, leaving a trail of ruin in its wake.
In any case, one thing seems certain: a potentially huge blockchain iceberg lies ahead. A recent global survey conducted across 56 different countries by Pegasystems, Cognizant and Marketforce amongst 500 senior executives in the financial services and insurance industries, found that this is no exaggeration. Indeed, 60% of global financial services retailers surveyed who had at least some understanding of blockchain revealed that they thought it would prove to be the most significant technological development since the internet. Meanwhile, 45% said that the combination of blockchain wallets and Peer-to-Peer lending could herald the “end of banking as we know it”.
However, if the blockchain iceberg really is looming large, it’s fair to say that for the most part, the reaction of most financial services retailers has been to refuse to change their course and, in some cases, pretend it isn’t there. The same study found that 35% of all global respondents admitted they have never heard of blockchain while of those who had, 23% had no understanding of the technology.
It’s difficult to reconcile these two sets statistics when you look at them objectively. On the one hand, we have a significant number of financial services retailers insisting that there is a new, emerging technology on its way that could have far-reaching consequences for the industry as a whole. On the other, we find a different set saying that they have either never heard of the technology, or have no idea how it works.
It’s the latter group that seems most troubling. None of us can see into the future, and there’s no suggestion that anybody should yet have a clear idea of exactly how the implications of blockchain will manifest itself. Will increased expectations from customers for blockchain-stored customer data revolutionise the industry to such an extent that many of the traditional banks and insurers we’ve become so accustomed to, go under in favour of newer, more agile, digitally-enabled providers? It’s still too early to say. However, what’s also clear is that it’s never too early to start investigating the source of potential disruption and exploring how it could impact on you.
Our survey found that only 17% of financial services executives already have a strategy in place for dealing with the impact of this new technology, while just 16% had a team of people in place working purely on blockchain. What this indicates is that there are dangerous levels of complacency towards technological change.
While this isn’t in itself a surprise – financial services organisations are not typically renowned as early adopters and visionaries when it comes to technological trends – there’s a difference between knowing that a tsunami is on its way and taking action and between donning a snorkel and flippers and taking up a position on the beach for a paddle.
To anybody working within the realms of a financial services retailer, my advice is simple. The sooner you and your organisation can take the time to understand the impact, assess the risk and develop appropriate strategies to deal with blockchain, the better your chances will be of keeping your head above water. The smartest organisations are those who are already putting teams in place to mitigate risk and to harness the power of digital transformation. Blockchain has the potential to completely change the way we use, depend and gather data in customer transactions – whether it be personal information, details of assets or even real-time data from virtual currencies.
The blockchain iceberg may not be directly ahead of us at the moment, but the truth is that it will be with us faster than any of us know. Unless the culture complacency is stamped out, financial services retailers will quickly find themselves in a situation where it’s every man and woman for themselves, and unable to find a spot on a lifeboat. By preparing properly and bracing for impact, organisations can learn the best way to steer themselves clear of danger, instead of facing a titanic struggle to stay afloat.