PwC's three predictions for the development of blockchain technology in 2016

Rage Comment: From PwC's suggestions, we can see that they have raised the strategic planning of blockchain to a very important level, and it is far beyond the questions that are still being asked in China, such as "What is blockchain?" and "What is the relationship between blockchain and our business?" Not only has the strategic focus shifted to how to closely connect with all the company's businesses and strategic transformation, but they have also begun to study intellectual property protection and the selection of strategic partners. If 2015 is the first year of blockchain, then 2016 will undoubtedly begin to enter the business competition level, and in this regard, we are far from ready, both in terms of technology and in terms of thinking.

Author Jeremy Drane is a senior director at the “Big Four” professional firm PwC (PwC, PriceWaterhouseCoopers), dedicated to researching Internet finance, blockchain and smart contracts in the United States. Cathryn Marsh is the director of PwC’s FSI Institute, which is dedicated to research and analysis of new technology intelligence for the financial services industry.

In this special area, Drane and Marsh outline the development trends of blockchain technology in the coming year and the key points in these development trends.

The speed of blockchain exploration and utilization is unprecedented.

We are currently witnessing it, from a startup idea to a specific technology in a very short period of time, it is now gradually becoming a standard tool for the Internet and even the entire personal computer era. Financial institutions have begun to realize the huge potential of blockchain technology as a program idea for improving the next generation of business processes, and it will even change the structure between customers, competitors and service providers.

In our view, blockchain technology is likely to lead to completely different competitive forces in the financial services industry. The existing profit-making methods will be completely overturned, and those who own new and efficient blockchain platforms will become the ultimate winners.

We expect a lot of changes to happen in the new year, and three major trends will be very important:

1. Traditional financial institutions will seek to protect their intellectual property rights as they explore new opportunities for collaboration with customers, suppliers and competitors.
2. Large financial institutions need to establish their own risk control parameters when setting strategic plans.
3. Market participants will develop relevant processes around the transaction level.

Traditional financial institutions will pay more attention to intellectual property protection

If you are already in the field of Internet finance, it is very likely that you have been thinking about how to incorporate blockchain technology into your business.

Traditional financial institutions, such as banks and exchanges, are looking for ways to improve and enhance various types of transactions, while startups and service providers who are well aware of this new technology are also working hard to better access and deploy this business model.

As we move into 2016, we will encourage these financial institutions to engage in dialogue and collaboration with each other to understand and share intellectual property among themselves.

Many industry insiders believe that this kind of industry cooperation from a technical perspective has a positive impact. However, strategic cooperation is definitely not suitable for this open model.

Therefore, we believe that these established financial institutions should build a core layer of their technical mastery and understanding so that they can better judge which information should be shared and which information should be kept strictly confidential.

Strategy requires risk control

In 2016 we will see many financial institutions being overtaken by latecomers, and many new market players entering and competing fiercely with the early movers.

In 2015, we saw a large number of market participants begin to talk publicly about their innovative blockchain-based products.

Then, we know that there are a lot of other companies designing their own solutions, and these research successes will eventually make their way into the entire market in the new year.

As financial institutions explore the possibilities of transforming their businesses in 2016, another challenge is to assess the likely long-term viability of their financial technology partners.

Many companies are looking to develop proofs of concept, experiments, or even direct investments based on blockchain technology, but it is important to understand the financial situation and strategic priorities of their potential partners, as well as the ecosystem that supports them. We don’t know who will survive until the next round of funding comes, but we will definitely see some of the currently successful startups run out of money or be acquired.

So how do financial institutions test, evaluate and judge new solutions to ensure that investing in them is the right thing to do?

We are developing new strategic plans to help companies set parameters and the right investment directions, and select projects and partners by establishing the right criteria.

Explore more transaction layers

In 2015, most of the market efforts were focused on proof of concepts based on transaction solutions. As financial institutions enter in force in 2016, we will see a shift away from the current transactional level towards supporting systems and processes.

The industry needs to start exploring governance, auditing and IT security.

We also see that the question for financial institutions will change from “How do I use blockchain technology?” to “How can we fully utilize blockchain technology to establish supporting processes?” and even “What impact will these new processes have on our risk control?”

We recommend that companies start experimenting with blockchain technology to test various internal company functions (such as compliance, risk, and internal audit) as early as possible, so that they will not stop at proof of concept and it will be easier to determine where the funds should be invested.

2016 and Beyond

The benefits of new technologies often do not benefit every market participant. In other words, there will always be winners and losers.

In this case, it is difficult for most participants to turn these technological advantages into tangible benefits.

We are likely to see a future where savvy market players joining forces with a handful of technology companies (a strategic relationship we call a “micro-alliance”) will be able to transform their costly internal processes into efficient and shared platforms. The resulting platforms will then be sold as a service to smaller competitors.

Only a few key partners will be able to coordinate both strategic and commercial relationships, which, from our perspective, will become a core competitive advantage in the coming years.

Due to the amazing speed of blockchain technology development, you may feel like you were sent to college right after kindergarten graduation. We think 2016 is like the summer vacation after kindergarten graduation, and you have to complete a lot of preparation in a short time to cope with the subsequent college courses.

If you want our advice, it's to make sure your learning capacity can keep up with the content you need to learn. You will need a strategic plan to determine your priorities.

In addition, you need to do in-depth research on this technology to ensure that you can really benefit from it.

Original article: http://www.coindesk.com/pwcs-3-predictions-blockchain-2016/
Author: Jeremy Drane & Cathryn Marsh
Translation: Prince Gong
Translation: http://qukuailian.com/?P=Cont&id=186