A significant number of projects are set to launch and become commercially deployed in the coming years, meaning that the finance industry blockchain market is on track to reach $462 billion by 2030, according to IHS Markit.
“The Securities and Exchange Commission in the United States, the Financial Conduct Authority in the UK, the Hong Kong Monetary Authority and other regulatory bodies are reacting positively towards blockchain technology within the financial sector,” says Don Tait, Principal Analyst, IHS Market. “The backing by these regulatory bodies bolsters the credibility of blockchain technology, helping it become more mainstream.”
There are numerous ways the financial industry can leverage blockchain, including cross-border payments, share trading and syndicated lending. As this is an area that includes markets of significant value, even a small percentage of cost savings and efficiency gains can lead to significant business value for companies and industries that venture down this route. The derivatives market, for example, is worth around $544 trillion a year and the market capitalisation of all the world’s stock markets is equal to $73 trillion.
“By applying blockchain to the clearing and settlement of cash securities – specifically, equities – investment companies could save up to $12 billion in fees,” Tait comments. “Blockchains can also save financial organisations money, by cutting out many of the traditional middlemen involved in the financial sector.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.