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Taking blockchain mainstream
By Richard Diffenthal
Over the course of 2018-19, we expect to see blockchain solutions begin to move out of the research lab and into the mainstream financial services eco-system. Blockchain has the potential to make profound and lasting changes to the financial services industry, with many advocates arguing that much of the existing centralised / siloed architecture that underpins financial services is capable of being disrupted by decentralised ledgers.
At the same time the convergence of blockchain with other technologies and concepts such as digital identity and open APIs opens up new opportunities for both financial institutions and their clients. This, coupled with AI and data analytics, will also open up new opportunities for financial institutions (of all shapes and sizes) to provide much more bespoke, personalised products and services. Financial institutions will be able to maintain a competitive advantage by developing new products and services that leverage these new technologies and improve the customer experience.
Similarly, given the explosion of interest in crypto-currencies in 2017 we expect to see more infrastructure being built to support the continued evolution of the crypto-markets. As this technology matures and these assets become more widespread and accessible, customers will demand the ability to move in and out of crypto with significantly less friction than they enjoy today. We also expect that we will see regulators in traditional financial services centres such as the US and the UK begin to develop regulatory frameworks for purely digital-assets classes which are designed to provide both issuers and investors with the appropriate levels of certainty and protection.
In the US, we have already started to see significant enforcement actions by the CFTC, the SEC and FinCEN involving cryptocurrencies – and the recently-commenced trading of Bitcoin futures contracts is being closely watched by the CFTC.
