'Blockchain Technology Holds Huge Potential to Transform Financial Services,' Says World Economic Forum's Report | Coinspeaker

‘Blockchain Technology Holds Huge Potential to Transform Financial Services,’ Says World Economic Forum’s Report

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by Polina Chernykh · 3 min read
‘Blockchain Technology Holds Huge Potential to Transform Financial Services,’ Says World Economic Forum’s Report
The Village setting at the World Economic Forum's Annual Meeting of the New Champions in Tianjin, People's Republic of China 2016. Photo: Greg Beadle via World Economic Forum/Flickr

On Friday, World Economic Forum released a new report on the blockchain technology and how it will change the future of the financial services infrastructure.

The technology behind bitcoin will play a significant role in reshaping the globe’s financial services industry, according to a new study prepared by the World Economic Forum. The report, called “Future of Financial Infrastructure”, focused on the potential applications of the technology and its impact on the future of the financial industry.

According to the WEF report, the technology will create new “financial services infrastructure and processes” and will “question traditional orthodoxies in today’s business models”. Thus, the use of the distributed ledgers will increase efficiency and simplicity of the financial system.

WEF has also stressed the need to cooperate with regulators, investors and other emerging technologies. “The most impactful distributed ledger technology applications will require deep collaboration between incumbents, innovators, and regulators, adding complexity and delaying implementation,” it reads.

The organization has analyzed the impact of using blockchain across nine segments of the financial services industry and its potential to improve these sectors. WEF added that the applications of the technology will differ by use case, with “each leveraging the technology in different ways for a diverse range of benefits.”

The report also mentions the main benefits of blockchain, which urge companies to investigate its potential applications. In addition to higher transparency and regulatory efficiency improvement, the technology will help to simplify operational processes and reduce manual work.

Meanwhile, the study highlighted that blockchain should not be perceived as a “panacea” and is just one of multiple technologies that will be used to transform the future of the financial services infrastructure.

Within the last few years, more than $1 billion has been invested into the blockchain technology. As WEF predicts, 80% of banks will launch new distributed ledger projects by 2017. Currently, over 90 central banks are discussing the integration of the technology.

The WEF study notes that there are still some technology issues, including security problems, that will take time to be solved. Besides, the industry member will have to collaborate with governments to develop rules for governing blockchain transactions. The study, meantime, did not mention bitcoin, or any similar digital currency.

It took a year for WEF to prepare the report and gather findings of major financial institutions. WEF collaborated with Deloitte, as well as the globe’s leading startups and banks, including Barclays, UBS, MasterCard, BlackRock, Deutsche Bank, Lloyds, Zurich Insurance, Visa, JPMorgan, US Federal Reserve, Coinbase, Circle, the Financial Conduct Authority, the European Central Bank, and the Bank of England.

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