The financial industry needs to move in unison to really unlock the potential of the blockchain, according to a fresh report, which sees the hyped tech revolutionising the sector.
Management consultants McKinsey have high hopes for the blockchain, arguing in the report “Beyond the hype: Blockchains in capital markets” that the new technology can “dramatically reshape” the capital markets industry.
The report suggests that the blockchain is likely to slash costs and capital requirements for the sector, and eventually reshape business models significantly.
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But to maximise the potential, banks need to learn to work together:
The full potential of blockchain technology will only be realised through cooperation among market participants, regulators and technologists and this may take some time.
The rapid growth of blockchain consortium R3, which just added 12 new banks to its ranks today, putting the total number of members at 42, would suggest that the industry agrees.
McKinsey’s report also argues that blockchain adoption among mainstream financial services will take place over four separate stages. First, the distributed ledger is set to unite financial firms’ legal entitites. Then, it will be able to replace manual processes at smaller banks.
At the the third stage, the blockchain is expected to convert inter-dealer-dominated markets, and finally, be adopted on a wide scale in public markets.
