Blockchain has long been touted as the next big thing in tech and now it looks like its time may finally have come. A new report from PwC forecasts that the technology which underpins Bitcoin is set to lead a revolution across the fintech sector.
While the sector has already experienced some dramatic technology-led changes over the past few years, PwC’s study indicates the trend is set to accelerate, with blockchain hitting the mainstream and advances in robotics and artificial intelligence set to reshape financial services by 2020.
“Several industry groups have come together to commercialise technology and apply it to real financial services scenarios. We expect this surge in funding and innovation to continue as blockchain and fintech move from a largely retail focus to include more institutional use,” the report says.
“While many of these companies may not survive the next three to five years, we believe the use of the blockchain ‘public ledger’ will go on to become an integral part of financial institutions’ technology and operational infrastructure,” it added.
Ciaran Kelly, head of advisory services at PwC's Ireland office, said blockchain will also have an impact locally and warned companies to prepare themselves for the arrival of the technology.
“Soon, blockchain may prove to have the same impact on the future of financial services as the internet had on many sectors such as media and entertainment, telecommunications, travel, retail and so on,” said Mr Kelly.
He warned that as well as hitting established players such as banks, the technology also threatens intermediaries such as legal professionals and accountants.
“Blockchain is undoubtedly going to shake things up. It will enable a higher degree of trust and efficiency on major transactions and therefore has the potential to cut out intermediaries who at the moment play a role in deals, such as solicitors who facilitate transfer of payments from say banks to builders. But it could also have an impact on the banks themselves at some future point,” he added.
Mr Kelly said that while issues around trust still exist, acceptance of blockchain technology by the likes of retailers, will make it more acceptable to the general public.
PwC’s study indicates that fintech start-ups will continue to encroach upon established markets while established players continue to struggle due to bad debts and legacy technology issues. However, he said that many financial institutions prefer to co-invest in partnerships with start-ups rather than seek to take them over.
“I don’t think start-ups want to be bought by the banks and I’m not sure that the banks themselves would know what to do with them anyway,” he said.
