The fervent enthusiasm for blockchain technology among the banking and financial industry is a case of the innovation being “over-hyped” according to a senior executive of technology research firm Gartner.
As blockchain takes center stage at the annual Swift-organized banking and financial conference Sibos, one technology executive sees the technology being over-hyped, at least in the short term.
Peter Sondergaard, senior vice president for technology at prominent technology research and advisory firm Gartner opined that while distributed ledger technology represents “fascinating area” to keep an eye on, there are too many expectations prophesized with its immediate application in the financial sector.
Sondergaard was speaking at the Gartner Symposium in Cape Town, South Africa recently, where he revealed his take on the hoopla surrounding Fintech and arguably banking’s hottest buzzword.
Speaking to regional Fintech publication fin24, Sondergaard said:
I think it [blockchain] is a fascinating area to keep an eye out for, but I think it’s being over-hyped right now.
Detailing why he thought the technology was pinned with far too many promises that it can keep, he added:
I think it’s being over-hyped from the aspect of its short-term impact because there are still technical things that you need to solve and scale and there are still counter-aspects – business model wise – that aren’t necessarily fully clear.
Sondergaard’s comments come at a time when bitcoin’s technology is seen as the core driver for a substantial change in various segments of the financial industry which could increase operational efficiencies and lower costs significantly while saving time.
The executive revealed his thoughts in implementing blockchain technology to everyday requirements while stating the innovation will play a role as an “extension of peer-to-peer models” which are already viable models that work in the present day.
Speaking to the publication, he added:
But when you overlay it with the requirements of everybody having the complete ledger running on your environment, it starts to be very heavy as you scale it.
Blockchain, while a threat to the existing clearing and settlement models used by banks and exchanges, also represents monetizing opportunities to the financial industry, according to the Gartner executive. Banks agree, as revealed by an IBM survey released today that shows banks pointing to reference data on a ledger that would be made available in a real-time basis.
Furthermore, Sondergaard sees distributed ledger solutions being adopted by multiple industries beyond finance and banking. Businesses that see a large and frequent volume of contract clearing would benefit, such as the shipping industry.
One blockchain developer has already developed an end-to-end solution for the shipping industry, in a revelation earlier this month. More recently a shipping company announced the deployment of the first ever public blockchain application in the industry.
Although Sondergaard’s take on blockchain adoption is to the contrary, today’s IBM survey that farmed insights from 200 global banks revealed that 15% of those banks will start implementing blockchain solutions powering their products and services to customers as early as 2017.
Image from iStock/Cesare Andrea Ferrari.