The majority of financial service providers familiar with the blockchain say the technology will emerge as the "most significant technological development since the Internet," according to a new report that offered renewed support for a tool for which some players have expressed doubts.
Analysis from Marketforce, business applications firm Pegasystems and information technology company Cognizant was published last week that explored the sentiment surrounding blockchain among 500 financial services firms across 56 countries.
While the majority of executives at these firms that understood how blockchain worked also agreed it would overhaul the world's financial systems, a massive number of those surveyed said they had never even heard of the term — more than a third, at 35 percent, the report said.
An additional 23 percent said that they may have heard of the term before but had no idea how the blockchain worked.
"For many, the jury is still out on whether or not blockchain will be a force for good or not," said Pegasystems Director and Industry Principal of Financial Services Graham Lloyd in a statement announcing the report. "However, we do know there's no longer room to be complacent about such a potentially significant source of disruption."
Analysts concluded that, for those financial services players that remain in the dark about blockchain's potential, they risk getting left behind as technology evolves.
"Banks and insurers must prepare themselves for the day when they might have to manage blockchain-stored customer data — whether it be their personal information, details of their assets or even real-time data from virtual currencies," Lloyd continued. "To do this, they will need to take the time to understand blockchain and how this emerging technology could affect them moving forward."
Pegasystems and the participating analysts focused on FinServ's response to the rise of blockchain technology as a key indicator of how prepared the industry is to compete in the future market.
Further assessment in the report "The Future Of Retail Financial Services" examined top concerns for FinServ players today, with 79 percent agreeing that their companies will have to significantly change the way they operate in the next five years if they are to remain relevant with a younger generation of customers, the research found.
Further, 80 percent agreed their company would need to accelerate the speed at which they create new services or adapt new technologies to increase their offering for customers.
Researchers focused on the retail banking and FinServ space, but the implications of these findings don't stop at the consumer.
Small business banking customers are driving many of the pressures that are forcing FinServ firms to change, too. The report pointed to "nimble new entrants" in a variety of banking services areas, including small business banking, that have increased competition in the market. New players, like iZettle and Square, are introducing high-tech SME financing and other services.
It all comes down to technology, researchers said, and if financial services firms want to keep their customers — consumers and SMEs — they'll need to embrace and educate themselves about what many of their competitors already know.
The report made a stern conclusion: If financial service providers don't wake up to the potential of blockchain and other emerging trends — like omnichannel and video banking services — they risk failing out of the market.
"The earlier this technology is understood at the highest levels of the business, the sooner organizations will be able to develop strategies to mitigate risk and harness the power of digital transformation," Pegasystems' Lloyd declared. "The smart players are those who already have teams dedicated to exploring this new technology."