McKinsey sees blockchain technology reaching utter potential in five years
McKinsey & Company, a global management consulting hard for governments and NGOs, recently submitted a blockchain Technology report to the US Federal Advisory Committee on Insurance. The rigid analyzed how the technology may disrupt a range of industries, emphasizing banking and insurance, and predicts commercial deployment of blockchain technology at scale by the year 2021. The rock hard states that most people in the industry already believe that blockchain technology will “have a material impact” within three to five years.
Calling the period inbetween two thousand nine and two thousand sixteen the “Dark Age,” where all solutions are bitcoin-based, the company suggests that a fresh era of Blockchain technology began in 2016. More mature businesses using the technology have now entered the market, and over a hundred blockchain solutions have been explored. The rigid expects twenty to thirty proof-of-concept use cases for blockchain technology to be tested in 2018, with ten to twenty successful business cases surviving and deployed commercially by late 2020.
“Based on the current rate of evolution, we believe blockchain solutions could reach their total potential in the next five years.”
McKinsey found sixty four different use cases for blockchains in a survey of two hundred companies. The report claims that the insurance industry has the largest non-bitcoin blockchain solutions, with twenty two percent, followed by the payments industry, with thirteen percent. Financial Services in general make up fifty percent of the total mix. In terms of dollars value, the fattest revenue generating sector is cross-border business to business payments, generating inbetween $50-$60 billion, followed by trade finance with $14-$17 billion.
24 use cases focused on financial services applications. However, seven of them were referred to as “genuine use cases” that addressed “associated ache points” with today’s systems, indicating that they will generate the most revenue and be the most pursued. Inbetween the seven use cases, McKinsey is expecting Blockchain to “generate
$80B to 110B in influence.”
Trade Finance, where it can lower costs and speed up turnarounds to a revenue boost of inbetween $14 and $17 billion.
Cross-border B2B payments, where lower costs and fees plus speedier delivery will save them around $50 – $60 billion.
Cross-border P2P payments, which like B2B payments can lower costs while adding speed, but do so for individual remittances, should add $Three – $Five billion to their bottom line.
Repurchase Agreement Transactions, where blockchains will lower operational costs and systematic risks, is worth around $Two to $Five billion.
Over The Counter Derivatives, where streamlined settlements lead to diminished operational costs and need for capital. $Four – $7 billion more saved here.
Know Your Customer / Anti Money Laundering Management, because it reduces duplicated effort and smooths the on-boarding process, worth inbetween $Four and $8 billion.
Identity Fraud, where more security leads to fewer harm payouts and more satisfied customers. $7 to $9 billion saved here as well.
Noting that the Venture Capital investments for blockchain startups are now coming off their early two thousand fifteen highs, the report points out that the established banking industry is pouring money into blockchain technology far swifter and more steadily, and a likely target of $$400 million during 2019.
The McKinsey report’s time estimate for total blockchain adoption is about half that of similar estimates. The World Economic Forum released a report in October two thousand fifteen about the tipping point of disruptive technologies, and included predictions about blockchain in it. Governments, the report claimes, would reach their tipping point for using blockchain technology by 2023, and people would reach their tipping point for using “bitcoin and the blockchain” in 2027.
Focusing on capital markets where stocks and bonds are traded, Euroclear and consulting rigid Oliver Wyman predict that for “it is likely to take more than ten years to overhaul core parts of the system.” However, over the next one to two years startups and standards for the space will rise, as well as “niche applications that will define fresh markets that do not exist today.” In another three to five years, they predict that the majority of large players will use blockchain technology. Global business consulting rigid Accenture has a similar timeline, with a two year shorter timeframe.
Top investment bank Morgan Stanley have released their own set of ideas that could corset blockchain technology, finish with a timeframe, but also spelled out a set of ten hurdles that are presently blocking financial institutions from adopting the technology. “While financial institutions are investing in research now, adoption will be iterative, asset-class by asset-class over the next five to ten years,” the stiff said in May.
More recently, IBM released a pair of reports in September, based on two surveys. One surveyed two hundred global banks, and the other two hundred global financial market institutions. Both reports focused on blockchain adoption and the rate in which it is being adopted. “Fifteen percent of banks and fourteen percent of financial market institutions interviewed by IBM intend to implement full-scale, commercial blockchain solutions in 2017,” the latter report states.
“Mass adoption isn’t that far behind with harshly sixty five percent of banks expecting to have blockchain solutions in production in the next three years.”