McKinsey report: Blockchain technology will go through four stages from niche to mainstream

McKinsey, a corporate management consulting firm, recently published a research report on "blockchain technology" titled "Beyond the Hype: Blockchain in Capital Markets". The report stated that the widespread application of blockchain technology in the financial field will go through four stages.

The report states that blockchain technology will "greatly reshape the capital market, impact business models and save costs."

McKinsey claims that the application of blockchain technology will bring significant short-term benefits to the capital market, not only speeding up clearing and settlement, but also reducing the number of accounts that financial institutions need to maintain and ensuring more accurate audit tracking.

However, a key finding of the McKinsey study is that the financial industry needs to unite to unlock the benefits of blockchain, as has been the case with the R3CEV blockchain consortium.

The report states:

“The full potential of blockchain technology will only be realized through collaboration between market participants, regulators and technology experts, which may take some time.”

The report points out that the irreversibility of blockchain data records is an obstacle to the deployment of blockchain. To overcome this obstacle, a mechanism must be reached by the participants running the blockchain network to reach consensus.

Although the road to deploying blockchain technology is full of challenges, the McKinsey report also provides a detailed roadmap for this issue, providing a reference for financial institutions.

Four stages

The first stage is that all legal entities of financial institutions come together to experiment with blockchain technology.

In this scenario, each corporate legal entity will act as a “node and bookkeeper” in the distributed ledger, which will provide corporate organizations with the opportunity to “rewire” their existing platforms.

“Design issues can be resolved internally and modified over time, and this first step can also be achieved through a blockchain-like network (private blockchain).”

From this point on, blockchain technology could be expanded by removing manual processes from a subset of banks, which McKinsey calls a “solid testing ground” for the technology.

“This small network of market participants can negotiate standards and protocols for registration and transfer with relatively little investment, with the potential to improve existing businesses.”

After the first phase, the blockchain market will be dominated by transaction middlemen, and finally it will enter the mass adoption phase, with buyers and sellers forming an open market.

Which sectors are adopting blockchain the fastest?

McKinsey also found that the fastest adoption of blockchain is expected to be in the over-the-counter market, which has “lower volumes and is largely manual.”

Other areas where blockchain solutions will quickly gain popularity include asset-backed securities, precious metals, repurchase agreements, syndicated loans, title insurance, and unregistered securities.

The report said that some of the earliest entrants into the Bitcoin space and the first to develop Bitcoin use cases are taking longer to develop.

For example, applications in the payment field:

“As bitcoin exchanges obtain licenses to accept cash deposits, the bitcoin trading market may slowly infiltrate foreign exchange (FX) businesses, and the application of blockchain technology in the payment field will gradually go beyond the current retail adoption, but this will take a long time.”

Original article: http://www.coindesk.com/mckinsey-four-stages-blockchain-adoption/
By Pete Rizzo
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information (http://www.8btc.com/mckinsey-report)