The financial industry stands to benefit from blockchain technology, but widespread adoption remains well into the future, says a new report released Thursday Moody’s Investors Service.
Many companies are exploring the potential of blockchain technology, the report says, which could be used to improve the efficiency and security of transactions and record keeping. The technology may have applications in a variety of sectors ranging from capital markets and trade finance to healthcare, energy, and taxation, the report adds.
Among the issuers that Moody’s rates, there are over 120 ongoing initiatives to develop blockchain technology, including investments in start-ups, internal projects, and industry collaborations, according to the report.
“There is significant enthusiasm for the potential of the technology, but there is still a limited track record of large-scale blockchain implementation in a regulated environment, and many hurdles lie ahead before we see widespread applications,” says Robard Williams, senior vice president at Moody’s, in a statement.
The challenges to implementing blockchain technology include its compatibility with existing systems, the need to develop industry standards, and regulatory uncertainty, the Moody’s report says,
Nevertheless, the potential of the technology will continue to drive companies to pursue the technology, the report adds.
“Longer-term, credit implications for rated issuers will depend on whether the positives in terms of more streamlined processes and reduced costs outweigh the negatives in terms of the potential to create competitive pressure from incumbents and new entrants that improve processes by leveraging blockchain technology,” the Moody’s report says.
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