Banks miss out on the 'blockchain high-speed train' and could lose out on a $150 billion feast

The financial industry has paid a lot of attention to blockchain technology. Although more and more banks have shown interest in distributed ledger technology, blockchain technology, the overall attitude is still "wait and see". Some experts believe that if banks do not get on the blockchain train as soon as possible, they will pay a high price in the long run.

It must be said that the financial sector seems to struggle with the decision-making process whenever blockchain technology is mentioned. Depending on who you ask, the technology may not [have] a first-mover advantage that needs to be considered. Distributed ledger solutions take time to develop, and initial projects will require some fine-tuning.

Blockchain’s moment has arrived

Additionally, banks seem to have a herd mentality when it comes to participating in the blockchain industry. For example, joining consortiums such as the R3 banking consortium, but this is not the best outcome in the long run. At the same time, it is important to establish partnerships in this field at an early stage. All R3 participants will use similar technologies that are interoperable between all these institutions. This approach may go a long way in terms of cross-border payments.

On the other hand, the banks’ approach makes it hard to see the way forward. Because blockchain will have the biggest impact in the areas of international payments and trade finance, there really needs to be a clear course of action. At the moment, there doesn’t seem to be a particular direction for all these projects to move forward.

The innovative side of blockchain technology cannot be ignored. The number of banks not participating in blockchain development efforts is still far greater than the number of banks that want to innovate. For competitors that fail to keep up with customer expectations and demands, financial losses will almost certainly occur quickly. To be more precise, banks could lose up to $150 billion in revenue by not participating in blockchain development.

Experimenting with distributed ledger technology before releasing it to the public is the right course of action. However, rather than being wary of potential scalability issues, a proactive approach is necessary. Financial institutions need to step up their presence in blockchain developments if they want to stay ahead of the curve. In this age of innovation and divergent customer demands, doing nothing is simply not an option.