More than 50 banks are clamoring to adopt blockchain technology, but few have taken action

More than 50 banks have clamored to adopt blockchain technology, including financial giants such as Goldman Sachs, JPMorgan Chase, and Citigroup, but everyone is waiting.

In fact, blockchain technology is only truly efficient when it is based on a universal standard for the entire industry. Therefore, for the first financial institution to truly adopt this digital system and adjust the existing infrastructure on a large scale, this means a lot of "ice-breaking" investment, and will also face the risk of whether other institutions will follow suit. This is also the reason why all banks are desperately participating in the conversation, but few banks are really promoting the application of this cutting-edge technology in the actual field.

In addition, it remains to be seen whether blockchain can truly become the underlying technology standard for enterprises and financial transactions. For the conservative and prudent financial industry, the current technology is indeed feasible, and simply replacing the status quo with an "unproven" new technology will be seen as a huge risk.

Fredrik Voss, vice president of blockchain innovation at Nasdaq, said, “For blockchain, the network effect is very important. Only when more financial institutions participate in its use can it become more useful and valuable.”

Because banks are currently pushing the technology with their mouths, technology companies are starting to take the lead. Grainne McNamara, co-leader of PwC's blockchain and financial services practice, said, "Technology companies are taking the lead for two main reasons. One is to further expand their market share in the financial services sector, and the second is that financial companies may transfer their infrastructure to the cloud through this technology upgrade." Therefore, technology giants such as IBM and Microsoft are the "vanguard" in promoting blockchain technology.

In fact, IBM and Microsoft have indeed been the leaders in promoting blockchain technology in recent years. Microsoft is working with Bank of America Merrill Lynch to use blockchain technology in trade financing processes, which is one of the most labor-intensive, material-intensive and time-consuming businesses for banks. IBM has worked with more than 300 clients to develop business applications of blockchain, covering foreign exchange settlement, smart contracts, identity management and other fields.

McNamara said that the Australian Stock Exchange (ASX) plans to decide in 2017 whether to replace its current post-trade settlement and delivery system with a blockchain technology system, which may be a turning point for the widespread use of blockchain.

In fact, once blockchain technology can be truly implemented and demonstrate network effects, its prospects will indeed have endless possibilities. It will completely change the current situation where each party to a transaction needs to record and save a copy separately, and everyone can jointly maintain the same record on the digital end, and it will be tamper-proof. In addition, it will not only bring about earth-shaking changes in the financial industry, but also in other industries such as the Internet of Things.

Therefore, as DTCC, chairman and CEO of the trade clearing company, said: "The market may overestimate the impact of blockchain technology on the industry in the next two years, but underestimate the impact in the next 10 years."