WEF Report: Blockchain to challenge status quo
The World Economic Forum (WEF) says in its report entitled “Opportunities & obstacles: Blockchain and the future of financial infrastructure” that distributed ledger technology, or blockchain technology, will drastically challenge the status quo.
The report, which was released last week, utilizes over 12 months of research, engaging more than 200 industry leaders and subject matter experts through interviews and multi-stakeholder workshops. It was developed in conjunction with multinational professional services firm Deloitte.
In a press release sent to CoinReport by Deloitte, Jesse McWaters, project lead, disruptive innovation in financial services, World Economic Forum, said, “The financial services infrastructure will be radically changed by blockchain technology, as it will re-draw processes and call into question policies that are the groundwork of today’s business models.”
Referring to the WEF report, he said, “Our research looks to the future state of blockchain technology, and by starting this conversation, we believe this will help further build perspective for what is to come.”
Other key findings from the report include:
- Emerging capabilities will deepen blockchain’s impact: Platforms such as Digital Identity, a fully digital system for storing and transferring identity attributes that could be directly integrated into distributed financial infrastructure, and Digital Fiat; (legal tender) currencies that are issued by central banks and could be employed within distributed financial infrastructure, ensuring the availability of liquidity even in the event of systemic instability; will amplify benefits and broaden the application of distributed ledger technology to new industries.
- There is no “one-size fits all” solution: Applications of blockchain will differ by use case, each leveraging the technology in different ways for a diverse range of benefits.
- Collaboration will yield the strongest progress: The most impactful blockchain applications will require deep collaboration between incumbents, innovators and regulators, adding complexity and delaying the implementation horizon.
- Blockchain is not the only solution: Instead, it should be viewed as one of many technologies that will form the foundation of next generation financial services infrastructure.
“Throughout the last 50 years, the financial services industry has embraced new technologies that now seem commonplace but were once cutting edge, including ATMs, credit cards, and electronic trading,” said Giancarlo Bruno, senior director, head of financial services industries, World Economic Forum. “In the same way, blockchain technology is moving from the margins of the finance industry to the main stage, and will continue to help build innovative solutions across the industry, becoming ever more integrated into the identity of financial services.”
However, the WEF report also points out key hurdles ahead of large-scale implementation of blockchain.
“Though technological innovation has been fundamental to industry transformation, there are other steps that will play a role in this disruption as well. Before full adoption is possible, there are factors that need to be addressed, including an uncertain regulatory environment, lack of standardization efforts, and the need for a formal legal framework,” said Bob Contri, global financial services industry leader, Deloitte Global.
Deloitte Canada partner Rob Galaski, who also leads the Deloitte team engaged on WEF’s Disruptive Innovation in Financial Services work, said, “While there is no doubting the transformative potential of blockchain technology, it is not a blanket cure for inefficiency in Financial Services. At this stage of evolution, the critical task is knowing where to focus your efforts. Blockchain is expected to have the greatest impact when applied to business problems involving: a shared repository of information, multiple writers, minimal trust, the presence of intermediaries and interdependencies between transactions. Without these conditions, Blockchain may not be the answer.”
The Distributed Ledger Technology project is the most recent phase of the WEF’s ongoing Disruptive Innovation in Financial Services work.
The full WEF report can be read here.
WEF headquarters – Alexey M. (CC BY-SA 4.0)
Deloitte’s global head office – David Shankbone (CC BY-SA 3.0)