While a majority of asset owners and asset managers (57 per cent) expect blockchain technology to be widely adopted in the investment industry in the next five years, only seven per cent currently have initiatives to support it, according to research by State Street.
Blockchain is a distributed ledger that maintains a continuously growing list of data records which are hardened against tampering and revision
The survey, conducted in partnership with Oxford Economics, found that 74 per cent of asset owners say they believe blockchain will achieve the scale needed for adoption compared to only 42 per cent of asset managers. Despite asset owners’ optimism, 48 per cent said they don’t know enough about it, and asset managers are even less confident, with 78 per cent noting that they need more education.
“A majority of institutional investors are well aware that blockchain, an ‘emerging technology,’ could become an everyday application in the near future,” says Antoine Shagoury, global chief information officer at State Street. “What’s clear from our research is a lack of readiness and uncertainty for how to best plan for this disruption, and a need for more education.”
The majority of respondents (80 per cent) agree that blockchain will have the greatest impact on IT departments, demonstrating that institutions recognise the need to introduce talent with the skills necessary to adapt to new technical demands. Additionally, 81 per cent of asset managers agree that the adoption of blockchain will equally disrupt their own jobs on investments teams.
While cryptography is a core component of the blockchain infrastructure, nine-out of-10 respondents worry about how security implementation in blockchains will address existing and future requirements, an issue that the industry needs to tackle in order for wide-scale adoption.
Regardless of industry-wide adoption, more than half of asset owners and asset managers (55 per cent) are convinced that blockchain is most likely to be used privately by companies with their clients. Only 13 per cent believe blockchain will be used broadly by the public.
“We’re excited by the opportunity blockchain presents and are working to make it a tangible reality for our businesses, partners and clients,” says Hu Liang (pictured), senior managing director and head of State Street’s Emerging Technologies Center. “We are actively supporting several blockchain and blockchain-inspired initiatives both internally and as part of a handful of consortia of the world's biggest banks and technology companies.”