Rising interest in blockchain technology is being supported by the expected benefits that it could bring to numerous areas of financial services, but many asset owners and managers admit that they don’t know much about it.
Interest in the technology is highlighted by 74% of asset owners believing that blockchain will achieve the scale needed for adoption, while only 42% of asset managers feel the same way, according to a survey by State Street and Oxford Economics.
However, despite the optimism from asset owners a large amount (48%) said they don’t know enough about the distributed ledger technology. This percentage is even greater when it comes to asset managers, with 78% saying they need more education.
Growing interest in the technology has been highlighted by the work that financial services firms are carrying out. From proof of concept tests to pilots of the technology, FS has been proactive in looking for ways to use blockchain.
Santander for example recently became the first UK bank to pilot blockchain for an international payments app.
The problem is that while examples like that of Santander suggest the emergence of blockchain into the mainstream, the reality is that very few have made strides with it.
The survey found that only 7% of asset managers and asset owners currently have initiatives underway to support blockchain-based concepts.
Although many agree that blockchain is something worth investigating, it would seem that few are proactively working on it.
Antoine Shagoury, global CIO, State Street, said: "A majority of institutional investors are well aware that blockchain, an ’emerging technology,’ could become an everyday application in the near future.
"What’s clear from our research is a lack of readiness and uncertainty for how to best plan for this disruption, and a need for more education."
While more education is needed, the majority of respondents to the survey (80%) felt that blockchain will have the greatest impact on IT departments, but asset managers also agree (81%) that adoption will equally disrupt their own jobs on investment teams.
Despite interest there remains concerns about the technology, namely in the shape of security.
Although cryptography is one of the core components of the blockchain infrastructure, nine-out-of-10 respondents were worried about how security implementation in blockchain will address existing and future requirements. This is an issue that the industry needs to tackle in order for wide-scale adoption.
The survey results are compiled from the responses of 50 asset owners and 50 asset managers, including asset management firms, private pension funds or retirement funds, and public pension and retirement funds.
