Banks to bet heavily on blockchain technology in 2017: Report

50% of banks surveyed have already invested in blockchain technology or will do so in 2017

Average investment in blockchain projects in 2017 is expected to be about $1 million

33% of financial company respondents expect to see commercial blockchain adoption by 2018, while majority 50% expect to see it by 2020

69% of banks experimenting with permissioned blockchains, while 21% plan to use hybrid variants

About 50% of the banks are either working with a Fintech start-up or technology company to augment their blockchain capabilities, while 30% have opted for consortium model

The adoption of blockchain technology by banks is expected to grow faster in the coming years.

According to an Infosys Finacle-LTP survey, 50% of banks have already invested in blockchain technology or will do so in 2017. The average investment in blockchain projects in 2017 is expected to be about $1 million.

Blockchain is a distributed database that is a continuously growing list of ordered records called blocks. Blockchains are designed to be resistant to modification of the data once recorded. Bitcoin is a form of blockchain technology.

Source: Infosys Finacle-LTP report

A number of investors are looking towards blockchain technology currently with the unstable geo-political and economic situation globally. Blockchain technology such as bitcoin has become one of the most popular avenues to invest in today and has seen a rapid growth in value over the last one year.

Source: Infosys Finacle-LTP report

The report said that 35% of the respondents belonged under the 'Early Followers' category and these financial institutions that have identified business cases for blockchain that are suitable for their organisation strategy and are looking to invest in the near future. Planned investments from these banks are in the range of $1 million to $10 million, said the report.

About 33% of financial company respondents expect to see commercial blockchain adoption by 2018, while majority 50% expect to see it by 2020. A large majority of these banks surveyed, about 69%, are experimenting with permissioned blockchains, while 21% plan to use hybrid variants.

Cross-border payments, digital identity management, clearing and settlement, letter of credit process and syndication of loans are the top 5 use cases by the respondents as the most likely for commercial adoption.

Source: Infosys Finacle-LTP report

About 50% of the banks are either working with a Fintech start-up or technology company to augment their blockchain capabilities, while 30% have opted for consortium model.

However, the two biggest challenges of adoption of blockchain technology is the readiness of the ecosystem and reduction in the settlement and transaction time.

Either Chief Technology Officers, Chief Innovation Officers or Line of Business Heads among the banks surveyed are the executives driving blockchain initiatives in their organisations.