How to deploy blockchain smart contracts to realize their huge potential in financial services

Rage Comment : All industries have reached a consensus on the realization of the huge potential of blockchain, believing that it will not be widely used in practice in the short term. Information management company Capgemini also found in a survey that although people fully recognize the potential of blockchain smart contracts, many people also believe that it will not be widely used in the near future, especially in the next six years. Therefore, this is an opportunity and a challenge. Since the potential of the technology is fully recognized, if it is not deployed as soon as possible, there will be a risk of falling behind.

Translation: Annie_Xu

Blockchain smart contracts could save the financial services industry billions of dollars in costs, but industry-wide technological breakthroughs will take many years.

Although blockchain technology and its application in the financial services industry have attracted great attention, there is no consensus on when it will be realized.

Information management company Capgemini believes that the biggest impact of smart contracts could be saving clients billions of dollars in costs.

Smart contracts can automatically make payments according to the terms of the contract, without the need for independent verification and manual processing, thus saving time and costs. Capgemini highlighted several application areas of smart contracts and their potential benefits. The document mentioned the application in mortgage loans several times, pointing out that the loan processing fee of $4,350 could be reduced by 22%.

In addition, car insurance claims can reduce costs by 12.5% ​​by simplifying the process, which can save customers 6% of their premiums.

Although organizations such as R3 are already conducting proof-of-concept tests and many applications are being implemented, it will take a long time for breakthroughs to occur across the industry.

A survey by SIX Securities Services shows that this will not be possible for at least the next six years.

Although there are currently 32% of proof-of-concept projects and 18% of product or service development projects, the generally accepted timeline for widespread blockchain adoption is six years.

Blockchain is a distributed database that can permanently store transaction data ledgers and cannot be tampered with.

The database contains two types of records, individual transactions and blocks, which are collections of data on all transactions during a certain period of time.

As might be expected, many respondents believe that blockchain will have a significant impact on clearing (34%) and settlement (38%).

Thomas Zeeb

“We’re seeing a lot of discussions around blockchain that are technical feasibility studies rather than business need studies,” said Thomas Zeeb, CEO of SIX Securities Services.

“Blockchain has the potential to replace a lot of business models and intermediaries, which is not necessarily a bad thing. What’s important is to understand its impact on the ecosystem.”

Despite the clear predictions of benefits, there has been little to no large-scale production testing of blockchain by major financial services organizations.

Capgemini reports that widespread adoption is possible due to the huge potential of smart contracts; therefore, those who don’t start testing now risk falling behind.