LONDON (Reuters) - Banks and other financial institutions are adopting blockchain technology “dramatically faster” than initially expected, with 15 percent of top global banks intending to roll out full-scale, commercial blockchain products in 2017, IBM said on Wednesday.
The technology company said 65 percent of banks expected to have blockchain projects in production in three years’ time, with larger banks - those with more than 100,000 employees - leading the charge.
IBM, whose findings were based on a survey of 200 banks, said the areas most commonly identified by lenders as ripe for blockchain-based innovation were clearing and settlement, wholesale payments, equity and debt issuance and reference data.
Blockchain, which originates from digital currency bitcoin, works as an electronic transaction-processing and record-keeping system that allows all parties to track information through a secure network, with no need for third-party verification.
But while almost every major bank has said it is looking into the technology, widespread financial adoption has been thought to be at least 5 to 10 years away. Consultancy Oliver Wyman said in a report in February it would take at least a decade for blockchain to overhaul core parts of the financial industry.
“The industry is hurtling toward blockchain adoption far faster than many expected,” IBM said in its report. “2017 looks to be the year banking on blockchains shifts from zero to sixty.”
The company also conducted a separate survey of 200 other global financial markets institutions, 14 percent of which intended to implement commercial blockchain products in 2017.
“First movers are setting business standards and creating new models that will be used by future adopters of blockchain technology,” said IBM Banking and Financial Markets general manager Likhit Wagle.
“These early adopters are better able to anticipate disruption, fighting off new competitors along the way.”
Microsoft and Bank of America Merrill Lynch said on Tuesday they had teamed up on a new project using blockchain in trade finance, aiming to create a framework that could eventually be sold to other businesses.
IBM also said it had announced several new blockchain ventures at this week’s Sibos financial conference in Geneva, including a project with currency settlement system CLS to develop a new payment netting service.
Reporting by Jemima Kelly; Editing by Mark Potter