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Blockchain Creates a $3.1 Trillion Tsunami of Opportunity. Most Organizations Will Miss Out


First published on Nasdaq, Inc. on Aug 30, 2023

Blockchain technology offers tremendous potential for the banking and financial services industry, and it’s estimated to create $3.1 trillion in new business value by 2030 across all sectors.

Unfortunately most of that will be left on the table because of unrealized blockchain projects that fail to make it out of the lab or do not focus sufficiently on ROI and are thus unsustainable proposals that get stuck as just that — a novel idea without business support to drive it into production. Only 15% of blockchain projects developed by organizations make it out of the lab and into production, meaning that 85% of organizations aren't making reality of the opportunities blockchain offers them.

In 2014, after a decade in banking, I was tasked with implementing blockchain as part of a Blockchain Center of Excellence at a European Bank. It was then that I saw how blockchain could solve real business problems, and after several challenging experiments and implementations, I left banking to simplify the blockchain transformation journey for enterprises.

From this vantage point, I've witnessed firsthand what’s creating insurmountable points of failure — and how they can be overcome or avoided. Here are some of the reasons why you may not be realizing the full opportunities that blockchain offers, and what the solution is to stay competitive as blockchain initiatives grow across the industry.

How Blockchain Complexity is Hampering Innovation and Growth

Many organizations are embarking on a digital transformation in order to increase their innovation, grow their returns, make an impact in their industry, and stay competitive. But what about embarking on a blockchain transformation?

Organizations can gain a number of benefits by bringing blockchain into their operations. In the banking and financial industry, blockchain can help digitize and automate financial service offerings between different parties, making transactions more secure and transparent while simultaneously removing thorny points of friction in financial transactions. Blockchain can improve security with distributed consensus-based systems, which creates a shared source of truth based on standards, protocols, and processes. Permissions and privacy are more easily secured on blockchain networks as well. Combine this with the possibility to automate middle and back office activities and handovers between departments and organizations with smart contracts, and we have a powerful set of tools to promote business network growth with smoother, multi-party coordination.

However, in attempting to capture these blockchain benefits, only 15% of those who embark on a blockchain transformation journey will be able to turn their vision into opportunity and ultimately into reality. The rest get stuck somewhere along the way at the edge of a chasm they can't seem to cross. There is ambition on one side, enormous opportunity on the other, but no viable bridge between the two. This chasm of blockchain complexity often derails projects because of the following factors.

No clear use case: One of the reasons why blockchain projects never get any further than an idea is because many organizations want to dive into blockchain adoption without having a clear use case for how they'll use the technology.

Lack of in-house expertise: Another reason blockchain projects may not launch is because there's a lack of in-house expertise around blockchain, or a skill set gap that may leave organizations wondering how to get started, how to develop their use case, and how to integrate and operate their technical solution for their use case.

Lack of helpful tools: Many organizations also lack the right tools and resources to bridge that chasm, like tools that can address the lack of in-house expertise by simplifying blockchain transformation projects into manageable platforms.

Little or no return on investment (ROI): Blockchain projects may never be implemented or may be abandoned after launch if organizations don't see the ROI or if the forecast payback period for their investment gets extended.

No implementation plan or strategy: Even if you do have a solid use case for blockchain, a lack of sufficient planning for its implementation, covering what technology to use, resources, people, and funding to be allocated, can cause projects to lose momentum and stall out.

Regulatory and compliance challenges: In addition to a lack of expertise, a lack of awareness around the regulatory and compliance requirements needed to successfully launch a blockchain project can be an obstacle as well.

Technical limitations and scalability issues: Unless blockchain projects are successfully integrated into current networks and data systems, they'll lack useability and scalability. In an enterprise context, there are always going to be complex integration requirements to push new products or services into production and these need to be fully understood so they can be adequately planned for.

Lack of adoption: Finally, projects may fail because users don't use it, and low adoption rates can come from steep learning curves, perceived hurdles, or simply a fear of “doing something different.”

What's at Stake with Missed Blockchain Opportunity

For organizations who are unable to successfully launch their blockchain project, it's not just an abandoned task, it's a missed opportunity. For instance, not being able to bring a blockchain project to fruition results in wasted time and money, including long innovation cycles and long fail cycles. During this time, there's a high cost for failure, and no ROI. It also swallows up ideas, projects, and people, who, if they can't see their project through to launch, many feel frustrated and disillusioned.

If they can't make it work, many organizations may write off blockchain as simply undoable or unimplementable for their organization. Skepticism begins to run rampant but this stance is very dangerous as it will undoubtedly mask advances that competitors who are able to make it work are making. The skeptical organization will inevitably find itself in a defensive stance, needing to move mountains later to catch up. As we have seen across industries that have undergone digital transformation over the past 20 years, laggards face compounding economic consequences, are outperformed by competitors, and have compromised growth opportunities. Ultimately, organizations will be impacted across every department by not rethinking their approach to blockchain transformation.

The Solution to Successful Blockchain Transformation

What can organizations do to bridge that chasm and start launching successful blockchain projects that have the ability to transform their organization? It starts by embracing blockchain transformation, the bridge between ambition and opportunity and the foundation to capture the lion's share of blockchain benefits in their industry.

This is made possible by blockchain transformation platforms that can bridge the chasm, making it easier for in-house developers to build blockchain applications quickly and efficiently. Upskilling developers with the right tools means that every developer can be a blockchain developer who builds applications to further business outcomes. But tools alone are not enough. Transformation is also made possible through an ecosystem of partner, expert, and community support.

Like digital transformation, blockchain transformation isn’t just implementing a new technology, but is about embracing a bigger change in processes, culture, job roles, and business models. Embarking upon a blockchain transformation in your organization means creating more value for customers and solving real business problems.

A Better Future with Blockchain Transformation

Blockchain technology offers tremendous potential for the banking and financial services industry, creating trillions in new business value in the coming years — especially considering that 79% of those in financial services believe that blockchain and digital assets will be important to the industry over the next two years. As blockchain gains traction as an industry priority, organizations who want to stay competitive need to prepare today by creating a strategy for blockchain transformation — including new technology, job roles, processes, and mindsets — in order to build a profitable, innovative, and scalable future.

💡 Stay in the loop with Chief Digital Heroes! Join me, Matthew, in engaging conversations with industry leaders leveraging Blockchain Transformation to fast-track value creation in banking and finance. Dive into these illuminating discussions, where my guests and I share valuable insights gained while navigating complexity and capitalizing on the opportunities unleashed by blockchain. Subscribe now for a firsthand look at the lessons we've learned on this transformative journey.

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