Study: Capital markets could adopt bitcoin technology by next year

Announcements | November 11, 2015 By:

According to a report by TABB Research, banks could adopt the technology behind bitcoin as early as next year, revolutionizing the industry by enabling more secure transactions and creating new streams of revenue.

TABB Research predict blockchain solutions will be applied to track syndicated loans by the second quarter of 2016, but added that other market sectors may take longer. For example, applying blockchain to derivatives will take up to five years to develop, while using blockchain to settle share trading is a decade away.

Utilizing blockchain technology would lead to more efficient and transparent systems to track and record financial transactions, or could improve upon existing systems used by banks, according to the report.

“Within capital markets, a number of top use cases are coming to the fore, opening new opportunities for efficiency and generating revenue from greenfield projects, including private equity, interbank payments and corporate debt, among others,” said TABB research analyst Shagun Bali.

The report also outlined a number of challenges that will oppose blockchain technology adoption, such as the expense of integrating it into pre-existing systems.

“Further due diligence for defining industry standards with regards to settlement, counterparty and other transactional risks involved are critical. As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead,” explained Bali.

TABB Group is a financial markets’ research and strategic advisory firm focused on capital markets.