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Blockchain Technology in Financial Services Market

Blockchain Technology in Financial Services Market - Analysis and Forecast: 2017 to 2026 (Focus on Opportunity and Use Case Analysis)

Blockchain as a technology is being gradually adopted across various facets of the financial services industry. Cost benefits, elimination of intermediaries and cost, transparency, removal of risk of unscrupulous activity, government initiatives, establishment of consortiums, and entry of leading financial institutions are some of the factors that have been driving the adoption of blockchain across the industry.

SKU: DT006A
Published Year: 2017
 
 

Blockchain as a technology is being gradually adopted across various facets of the financial services industry. Cost benefits, elimination of intermediaries and cost, transparency, removal of risk of unscrupulous activity, government initiatives, establishment of consortiums, and entry of leading financial institutions are some of the factors that have been driving the adoption of blockchain across the industry.  The report is a compilation of various segments including industry analysis, market dynamics, and market breakdown by application type.

The report provides a comprehensive market analysis along with the recent trends influencing the markets. The report focuses on the various opportunities and use cases that financial institutions and blockchain technology providers could capitalize on and the cost benefits and value they could derive. While highlighting the key driving and restraining forces for the widespread adoption of the technology, the report also provides a detailed study of the future trends and developments of the market. It also examines the role of the leading market players involved in the industry.

The report addresses the following key questions about the global market:

•    What are the key uses of blockchain technology that have been identified and what are the benefits associated with them?
•    Which asset classes is blockchain technology likely to disrupt and how?
•    Which segment of the financial services industry will benefit the most from a gradual movement to the technology?
•    What phase of development are various use cases of blockchain currently in and by when are they expected to be implemented?
•    Which segment will witness the earliest implementation and why?
•    Which factors will be driving the adoption of the technology through the forecast period?
•    What factors are expected to impede the adoption of the technology?
•    Which consortiums are actively participating to endorse the use of blockchain technology?
•    Which governments are exploring, supporting and promoting the use of blockchain technology and how?
•    Who are the key technology providers in the market for different use cases and what are their business models?
•    What is the most prominent strategy such as Mergers and Acquisitions, Partnerships, and Product Launch among financial institutions for leveraging the technology?

The company profiles section includes highlights of significant information about the key companies involved along with their corporate overview, financial summary, SWOT analysis, key strategies & developmental activities of recent years (2015-2017). Some of the key players are IBM, Microsoft, Digital Asset Holdings, Everledger, Clearmatics and Bitbond.

TABLE OF CONTENT
Executive Summary
1 Research Scope and Methodology
1.1 Scope of the Report
1.2 The Blockchain Technology Report Research Methodology
1.2.1 Primary Data Sources
1.2.2 Secondary Data Sources
2 Industry Analysis
2.1 Blockchain Structure
2.2 Blockchain Construct
2.2.1 Proof-of-Work (POW)
2.2.2 Proof-of-Stake (PoS)
2.3 Blockchain Ecosystem
2.4 Foundational Elements of Blockchain
2.5 Types of Blockchain
2.5.1 Public Blockchain
2.5.2 Private Blockchain
2.5.3 Permissioned Blockchain
2.6 Blockchain Consortiums
2.6.1 Bank-Chain
2.6.2 B3i
2.6.3 Blockchain and Virtual Currency Association of India
2.6.4 CULedger
2.6.5 DTC-Blockchain Consortium
2.6.6 Fundchain
2.6.7 Global Blockchain Business Council
2.6.8 Japanese Blockchain Consortium
2.6.9 JPX Blockchain Consortium
2.6.10 Nimbrix Blockchain Consortium
2.6.11 Post Trade Distributed Ledger Group (PTDL)
2.6.12 Revolution 4
2.6.13 R3
2.6.14 Russian Blockchain Consortium
2.6.15 Shenzhen Consortium
2.6.16 Swiss Blockchain Consortium
2.6.17 Wall Street Blockchain Alliance
3 Market Dynamics
3.1 Market Drivers
3.1.1 Elimination of Intermediaries and Cost Savings
3.1.2 Transparency and Removal of Risk of Unscrupulous Activity and Security from Cyber Attacks
3.1.3 Government Initiatives
3.1.4 Establishment of Consortiums
3.1.5 Entry of Leading Financial Institutions
3.2 Market Challenges
3.2.1 Non-Uniformity of Legal and Regulatory Framework
3.2.2 Trade Off between Cost and Security
3.2.3 Lack of Awareness of Blockchain Technology
3.2.4 Fragmented Networks
4 Competitive Insights
4.1 Key Strategies & Development
4.1.1 Mergers & Acquisitions
4.1.2 Product Development & Launch
4.1.3 Partnerships, Joint Ventures & Collaborations
4.1.4 Business Expansions
4.1.5 Lawsuits
4.1.6 Funding
4.1.7 Events
5 Blockchain Application in Financial Services
5.1 Onboarding process (KYC/AML):
5.2 Syndicated Loans
5.3 Insurance
5.4 Trade Finance
5.5 Capital Markets
5.6 Asset Management
5.7 Cross Border Payments
5.7.1 B2B Cross Border Payments
5.7.2 P2P Cross Border Payments
6 Company Profiles
6.1 Accenture PLC
6.1.1 Company Overview
6.1.2 Financials
6.1.2.1 Overall Financials
6.1.2.2 Net Revenue by Business Segment
6.1.2.3 Net Revenue by Region
6.1.2.4 Financial Summary
6.1.3 SWOT Analysis
6.2 Algorythmix
6.2.1 Company Overview
6.2.2 About the Company
6.3 AlphaPoint
6.3.1 Company Overview
6.3.2 About the Company
6.4 Alt-Options LLC
6.4.1 Company Overview
6.4.2 About the Company
6.5 Bank of America
6.5.1 Company Overview
6.5.2 Financials
6.5.2.1 Overall Financials
6.5.2.2 Net Revenue by Business Segment
6.5.2.3 Net Revenue by Region
6.5.2.4 Financial Summary
6.5.3 SWOT Analysis
6.6 Bsave
6.6.1 Company Overview
6.6.2 About the Company
6.7 Bitbond
6.7.1 Company Overview
6.7.2 About the Company
6.7.3 SWOT Analysis
6.8 Circle Internet Financial Inc.
6.8.1 Company Overview
6.8.2 About the Company
6.8.3 SWOT Analysis
6.9 Citigroup
6.9.1 Company Overview
6.9.2 Financials
6.9.2.1 Overall Financials
6.9.2.2 Net Revenue by Business Segment
6.9.2.3 Financial Summary
6.9.3 SWOT Analysis
6.10 Clearmatics
6.10.1 Company Overview
6.10.2 About the Company
6.11 ConsenSys
6.11.1 Company Overview
6.11.2 About the Company
6.12 Coinbase
6.12.1 Company Overview
6.12.2 About the Company
6.13 Digital Currency Group
6.13.1 Company Overview
6.13.2 About the Company
6.14 Digital Asset Holdings, LLC
6.14.1 Company Overview
6.14.2 About the Company
6.15 Earthport
6.15.1 Company Overview
6.15.1 Financials
6.15.1.1 Overall Financials
6.15.1.2 Net Revenue by Business Segment
6.15.1.3 Net Revenue by Region
6.15.1.4 Financial Summary
6.15.2 SWOT Analysis
6.16 Everledger
6.16.1 Company Overview
6.16.2 About the Company
6.17 EquiChain
6.17.1 Company Overview
6.17.2 About the Company
6.18 IBM Corporation
6.18.1 Company Overview
6.18.2 Financials
6.18.2.1 Overall Financials
6.18.2.2 Net Revenue by Business Segment
6.18.2.3 Net Revenue by Region
6.18.2.4 Financial Summary
6.18.3 SWOT Analysis
6.19 Kraken Digital Asset Exchange
6.19.1 Company Overview
6.19.2 About the company
6.20 Microsoft Corporation
6.20.1 Company Overview
6.20.2 Financials
6.20.2.1 Overall Financials
6.20.2.2 Net Revenue by Business Segment
6.20.2.3 Net Revenue by Region
6.20.2.4 Financial Summary
6.20.3 SWOT Analysis
6.21 Ripple
6.21.1 Company Overview
6.21.2 About the Company
6.22 R3CEV
6.22.1 Company Overview
6.22.2 About the Company
6.23 Safello
6.23.1 Company Overview
6.23.2 About the Company
6.24 ShoCard
6.24.1 Company Overview
6.24.2 About the Company
6.24.3 SWOT Analysis
6.25 Tallysticks
6.25.1 Company Overview
6.25.2 About the Company
6.26 Infosys Limited
6.26.1 Company Overview
6.26.2 Financials
6.26.2.1 Overall Financials
6.26.2.2 Net Revenue by Business Segment
6.26.2.3 Net Revenue by Region
6.26.2.4 Financial Summary
6.26.3 SWOT Analysis
List of Tables
Table 3.1 Market Drivers – Impact Analysis
Table 3.2 Financial Institutions and Blockchain Ventures
Table 3.3 Market Drivers – Impact Analysis
Table 4.1 Mergers and Acquisitions
Table 4.2 Product Development and Launch
Table 4.3 Partnerships, Joint Ventures and Collaborations
Table 4.4 Key Business Expansions in the Blockchain Technology Landscape
Table 4.5 Key Lawsuits in the Blockchain Technology Landscape
Table 4.6 Key Funding in the Blockchain Technology Landscape
Table 4.7 Events
Table 5.1 Effect of Blockchain on Risks associated with Capital Markets
Table 5.2 Cost Savings in Cross Border Payments, 2017-2026, $Billion
Table 5.3 Companies Leveraging Blockchain Technology for Payments
List of Figures
Figure 1 Phase of Development of Use Cases
Figure 2 Blockchain Application Analysis
Figure 1.1 Blockchain Technology Report Scope
Figure 1.2 Bottom-Up Approach for Estimating Effect on Costs
Figure 2.1 Blockchain Structure
Figure 2.2 Process Flow in Proof-of-Work (PoW)
Figure 2.3 Comparison between Proof-of-Work and Proof-of-Stake
Figure 2.4 Blockchain Ecosystem
Figure 2.5 Public Blockchain
Figure 2.6 Private Blockchain
Figure 2.7 Blockchain Ecosystem by Type of Blockchain, 2017 and 2026
Figure 3.1 Market Drivers and Challenges
Figure 4.1 Strategy of Key Financial Institutions
Figure 5.1 Timeline of Blockchain Use Case Development
Figure 5.2 Challenges with the Current KYC On-Boarding System
Figure 5.3 KYC Cost Savings, $Million
Figure 5.4 KYC Revenue Generation for Financial Institutions ($Million)
Figure 5.5 Drivers and Challenges of Blockchain for KYC/AML Processes
Figure 5.6 Syndicate Loan Ecosystem
Figure 5.7 Syndicated Loan Settlement Process with Blockchain
Figure 5.8 Syndicated Loans: Increase in Revenue, 2020-2026 ($Billion)
Figure 5.9 Insurance Ecosystem
Figure 5.10 Insurance Penetration, by Region, %
Figure 5.11 Key Costs associated with Insurance
Figure 5.12 Use Cases of Blockchain in Insurance
Figure 5.13 Cost Savings due to Blockchain, ($Billion)
Figure 5.14 IoT and Blockchain for Usage Based Insurance (UBI)
Figure 5.15 Challenges in Intelligence Sharing in the Insurance Industry
Figure 5.16 Reduction in Fraud due to Blockchain, ($Billion)
Figure 5.17 Claim Processing without Blockchain
Figure 5.18 Claim Processing on Blockchain
Figure 5.19 Increase in Insurance Premiums due to Blockchain, 2021 -2026 ($Billion)
Figure 5.20 Microinsurance Market: Market Potential
Figure 5.21 Potential Increase in Insurance and Microinsurance Premiums using Blockchain, 2020-2026, ($Billion)
Figure 5.22 Trade Finance Ecosystem
Figure 5.23 Trade Finance Gap
Figure 5.24 How Firms Deal With Rejection of Trade Finance
Figure 5.25 Letter of Credit Process
Figure 5.26 Trade Finance with Blockchain
Figure 5.27 Blockchain Cost Benefits in Trade Finance, 2019, 2026
Figure 5.28 Capital Markets Ecosystem
Figure 5.29 Effect of Blockchain on Financial Transaction Settlement Time
Figure 5.30 Effect of Blockchain on Costs associated with Capital Market Operations
Figure 5.31 Phases of Blockchain Adoption Across Asset Management Ecosystem
Figure 5.32 Cost Saving Across Different Segments
Figure 5.33 Sequence of Adoption of Blockchain
Figure 5.34 Cross Border Payments Cost Savings with Blockchain
Figure 5.35 Cross-Border Payment without Blockchain
Figure 5.36 Cross-Border Payments on Blockchain
Figure 5.37 Transfer of Money from Peer to Peer through Blockchain
Figure 6.1 Accenture PLC: Overall Financials, 2014-2016
Figure 6.2 Accenture PLC: Net Revenue by Business Segment, 2014-2016
Figure 6.3 Accenture PLC: Net Revenue by Region, 2014-2016
Figure 6.4 Bank of America: Overall Financials, 2013-2015
Figure 6.5 Bank of America: Net Revenue by Business Segment (2015-2106)
Figure 6.6 Bank of America: Net Revenue by Business Segment, 2014
Figure 6.7 Bank of America: Net Revenue by Region, 2014-2016
Figure 6.8 Citigroup: Overall Financials (2014-2016)
Figure 6.9 Citigroup: Net Revenue by Business Segment, 2014-16
Figure 6.10 Earthport: Overall Financials, 2014-2016
Figure 6.11 Earthport: Net Revenue by Business Segment (2014-2016)
Figure 6.12 Earthport: Net Revenue by Region, 2014-2016
Figure 6.13 IBM Corporation: Overall Financials, 2014-2016
Figure 6.14 IBM Corporation: Net Revenue by Business Segment, 2015-2016
Figure 6.15 IBM Corporation: Net Revenue by Business Segment, 2014
Figure 6.16 IBM Corporation: Net Revenue by Region, 2014-2016
Figure 6.17 Microsoft Corporation: Overall Financials, 2014-2016
Figure 6.18 Microsoft Corporation: Net Revenue by Business Segment, 2014-2016
Figure 6.19 Microsoft Corporation: Geographic Revenue Mix, 2014-2016
Figure 6.20 Infosys Limited: Overall Financials, 2014-2016
Figure 6.21 Infosys Limited: Net Revenue by Business Segment, 2014-2016
Figure 6.22 IBM Corporation: Net Revenue by Region, 2014-2016

Financial institutions, ranging from banks and insurance companies to investment banks and audit firms are all exploring the potential of blockchain in eliminating the inefficiencies of the financial systems. Venture capitalists poured over a billion dollars in 2016 to further probe the viability of the futuristic technology. Financial industry, today, is heavily reliant on duplicative antiquated and paper-intensive processes which lead to large delays and impose considerable costs. Moreover, their centralized nature, makes them resistant to change and susceptible to systems failures and malicious attacks. Blockchain technology could not only eliminate these perils but could also pave way for an array of new product segments and revenue streams and provide billions of people access to financial services and instruments that have traditionally been denied to them. A blockchain is a distributed database that maintains a continuously growing list of records, called blocks. Blockchain records are time stamped and stored cryptographically in a chronological manner, which makes them immutable and tamperproof in nature. Blockchain presents the potential to revolutionize the pre-existing legacy systems by eliminating third party intermediaries, creating transparency, streamlining due processes and providing protection from malicious attacks, thereby enabling large internal and external cost savings. 

More than 40 use cases of blockchain in financial services are being explored including optimizing KYC process, trade finance solutions, asset servicing, claim management in insurance, and post trade solutions in capital markets. Leading financial institutions and banks including Citibank, J.P. Morgan, Goldman Sachs and Barclays among others have all the efforts and investments to drive the futuristic technology. The growing demand for the technology has led to the emergence of a multitude of start-ups in this space, offering enterprise solutions spanning across processes.

Some companies have invested heavily and are proactively pushing the exploration of the technology through either isolated internal experiments or in partnerships with technology providers or in groups relying on industry consortiums. However, despite the build-up regarding the transformative potential of blockchain, more than 40% financials remain skeptical about the practical implementation and viability of the technology and have adopted a ‘wait and see’ approach for the near future. As and when it happens, the uptake of the technology could save the BFSI industry up to $XXX billion per year by 2025 in infrastructure costs, IT costs, operations costs, support function costs and personnel costs. One of the biggest beneficiaries of the technology will be the trade finance segment which could yield up to $XX billion in savings by eliminating middlemen and automating process ranging from tracking products through the supply chain to exchange of documents and final payments releases.  

The following figure depicts some of the applications and use cases of blockchain across financial industry segments, their cost benefits, and examples of key players.

Figure
Potential Use Cases of Blockchain and their BenefitsPotential Use Cases of Blockchain and their Benefits

Movement to blockchain based solutions will require large investments and efforts including annihilation of current infrastructure, which might make institutions hesitate from changing from legacy systems and processes. Moreover, the information placed on ledgers is being stove piped due to development of multiple blockchain, all with different standards within industries. This is leading to failure to harness network efficiencies and defeating the purpose of distributed ledgers. Certain consortiums and organizations such as R3, which consists of over 70 financial institutions, Financial Blockchain Shenzhen Consortium, and Blockchain Insurance consortium B3i are looking to circumvent this challenge by pushing industry stakeholders to work together.

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