Dive Brief:
- Immature blockchain interoperability standards will prevent the technology's widespread, short-term deployment in the financial services industry, according to analysts from Gartner, presenting research at the Gartner IT Symposium/Xpo in South Africa.
- As a growing group of providers compete to become the preferred option for banks and other financial institutions, the analyst firm predicts up to four standards to lead the market over the next three to five years.
- Over the next two to three years, Gartner analysts predict blockchain market consolidation will impact adjacent tech industries. Leading ERP and CRM providers will offer blockchain capabilities as an add-on feature in their products by 2022.
Dive Insight:
For the heavily regulated financial services industry, blockchain is not yet ready for widespread adoption.
"Blockchain standards for financial services companies are currently fragmented and immature," said Fabio Chesini, senior research director at Gartner, speaking at the conference. "We are three to five years until standards mature and settle."
Per the analyst, financial services CIOs should pay close attention to three other hurdles blockchain projects face:
- Governance: Gartner expects the management of private and permissioned blockchains will "remain centralized and hierarchical" until at least 2022, which represents another hurdle.
- Integration: Currently, integrating blockchain platforms with existing systems can cost organizations millions of dollars, which further slows blockchain adoption.
- Interoperability: In the future Gartner projects, the leading blockchain providers will need to seemlessly engage with one another. But those capabilities aren't yet available as the platforms themselves continue to evolve.
Gartner expects blockchain's business value across industries will add up to $176 billion by 2025. Five years later, its value will top $3.1 trillion.
But before that impact can be realized, decision makers will need to overhaul the majority (90%) of blockchain platform implementations to ensure they can remain competitive and secure as the market matures.
