McKinsey, the world's largest consulting giant, released a blockchain development report: Blockchain technology will reach its full potential in the next five years

McKinsey McKinsey & Company , the world's largest management consulting firm, recently submitted a blockchain technology report to the U.S. Federal Insurance Advisory Committee (download the full report). The report analyzes how blockchain technology may disrupt a wide range of industries, with a particular emphasis on the banking and insurance industries, and predicts that blockchain technology will achieve large-scale commercial deployment by 2021. The company said that most people in the industry believe that blockchain technology will have a "substantial impact" within 3 to 5 years.

The report calls the period from 2009 to 2016 the "Dark Ages," during which all solutions were based on Bitcoin. The company believes that the new era of blockchain will begin in 2016. More mature enterprises using this technology have now entered the market, and more than 100 blockchain technology solutions have been explored. The company expects 20 to 30 blockchain technology proof-of-concept use cases to be tested in 2018, and 10 to 20 successful enterprise cases will survive and be commercially deployed in 2020.

“Based on the current rate of development of blockchain, we believe that blockchain solutions may reach their full potential in the next five years. - McKinsey & Company”

McKinsey surveyed 200 companies and found 64 different use cases. The report claims that the insurance industry is the largest non-Bitcoin blockchain solution - 22%. Next is the payment industry - 13%. Financial services overall accounted for 50% of the use cases. In terms of dollar value, the largest revenue-generating area is cross-border business-to-business payments, with revenue of $50-60 billion, followed by trade finance, with $14-17 billion.

Of the 64 different use cases, 24 are in financial services applications. However, seven of them are described in the report as "real use cases" that solve some "pain points" in the current system, and they are pointed out that these cases will bring the most revenue and are the most worth pursuing. Among these seven use cases, McKinsey expects blockchain to generate "between $80 billion and $110 billion in benefits."

1. Trade finance : Blockchain could reduce costs and increase turnover, increasing revenue by $14-17 billion.

2. Cross-border B2B payments : Blockchain can bring lower costs and fees, while speeding up payment services, saving approximately US$50-60 billion.

3. Cross-border P2P payments : As with B2B payments, blockchain can also reduce costs and speed up the process in this area, but for personal remittances, it is estimated that savings can reach $30-50 billion.

4. Repurchase agreement transactions : Blockchain can reduce the cost and systemic risk of these transactions, which are estimated to be worth approximately $2-5 billion.

5. OTC derivatives market : Blockchain can simplify the settlement process, thereby reducing operating costs and capital requirements, with an estimated savings of approximately US$4-7 billion.

6. KYC/AML management : Blockchain can reduce duplication of work and smooth the intervention process, which is expected to bring in $4-8 billion in revenue.

7. Identity fraud : Blockchain brings greater security and reduces consumer losses, with an estimated savings of $7-9 billion.

It is worth noting that venture capital investment in blockchain startups in 2016 has exceeded 2015 and set a new record. The report pointed out that the banking industry is injecting funds into blockchain technology more quickly and steadily, and it is expected to reach US$400 million in 2019.

The report estimates that blockchain will be adopted in about half the time of other reports. The World Economic Forum (WEF) released a report on the tipping point of disruptive technologies in October 2015, which included predictions for blockchain technology. The report claimed that governments will reach the tipping point for blockchain technology use by 2023, while the private sector will reach the tipping point for "bitcoin and blockchain" use by 2027.

Regarding capital markets for stocks and securities trading, Euroclear and consultancy Oliver Wyman predict that “blockchain technology may still take more than 10 years to disrupt the core of this system.” However, in the next one to two years, startups and standards in this field will emerge, as well as “niche applications that will define new markets.” In another three to five years, most large players will use blockchain technology. Global business consulting firm Accenture predicts a similar timeline for blockchain development, but two years shorter.

Top investment bank Morgan Stanley has also published some of their views on the use of blockchain technology and given a time frame, but they also pointed out 10 barriers that are currently preventing financial technology from adopting the technology. In May last year, the company said:

“While financial technology is investing resources into researching this technology, adoption will be iterative and asset class-by-asset over the next five to ten years.

More recently, IBM released two reports based on two surveys in September last year, one of which surveyed 200 global banks and the other surveyed 200 global financial market institutions. Both reports focused on blockchain adoption and adoption rates. The reports stated:

“14% of banks and 14% of financial market institutions surveyed plan to fully implement commercial blockchain solutions in 2017.”

“Mass adoption of blockchain technology is not too far away, with nearly 65% ​​of banks expecting to adopt blockchain solutions within the next three years. - IBM”