Growing business interest in blockchain has resulted in a large number of proofs of concepts (POC). These trials reveal information that sourcing and vendor management leaders can use to understand the emerging professional services market around Blockchain. As of February 2017, “blockchain” was the second most-searched-for term on Gartner.com, having increased in volume by 400% in the last 12 months. Between 2015 and 2016, the number of Gartner client enquiries grew by more than 600%. This proves that interest is growing exponentially.
Blockchain resolves the problem of a lack of trust between counterparties
Gartner recently analyzed 129 blockchain consultancy engagements carried out by providers. Ninety four of them were carried out by the banking, insurance or investment and capital markets sector. The remaining POCs were split fairly evenly among other sectors such as retail, gaming, manufacturing and healthcare.
“For an executive in charge of the sourcing strategy, the key point is that blockchain can be used to create a tamper-proof ledger that organizations can trust as a record of transactions,” said David Groombridge, research director at Gartner. “The most common use is to record financial transactions, but other transactions, such as the movement of physical or digital assets can be stored in a blockchain ledger, or it can simply be used to store an immutable record of data.”
Blockchain and Payment Processing
Payment processing is the primary area of investigation for the banking sector, specifically cross-border payments or more general payment use cases. Within the investment and capital markets sector, the focus is on trading and settlement processing. Both sectors seek to leverage the technology to drive substantial efficiency savings, through the creation of a single version of “the truth” across all counterparties and third parties.
POCs outside financial services shared many of these use cases, particularly in payments, trade/asset finance, and virtual currency usage. There is, however, substantial interest in using blockchain to audit and track goods through supply chains, and subsequently to re-engineer core accounting and reconciliation processes.
“Although financial use cases dominate, the long tail of ‘one off’ use cases underlines the potential for blockchain technology to change a wide set of business processes across diverse industry sectors,” said Mr. Groombridge.
It’s important to note that despite this surging interest in blockchain, large scale deployments in active use won’t come overnight.
“Blockchain resolves the problem of a lack of trust between counterparties,” said Mr. Groombridge. “So it’s inevitable that the problems it solves best will be the ones where multiple organizations must work together. Failure to secure cross-industry or government participation will confine most blockchain POCs to the trial stages.”