Cape Town: Lack of inter-operability standards will
prevent widespread blockchain deployment across financial services
ecosystem for at least three years, according to research firm Gartner.
Today, bank Chief Information Officers (CIOs) can choose from numerous blockchains, available from either enterprise-grade approaches, like Corda, Hyperledger and Digital Asset, or the many public blockchain standards, like Bitcoin, Ethereum, Cardano, EOS, and Tezos.
They are all trying to become the de facto state machine for value exchange and digital asset representation, smart contracts and decentralised applications. This indicates the fragmentation of the various standards. "Bank CIOs must be mindful of this nascent and fragmented state of blockchain standards," said Chesini.
"It is unlikely there will be a single de facto standard, like in the Open Systems Interconnection (OSI) model, at all levels. Given how new and fragmented the state of blockchain standards is, we expect no more than four standards to lead the market in 3-5 years," Chesini said.
In addition to standards, Chesini warned financial services CIOs of three additional impediments when deploying blockchain projects -- governance, integration and inter-operability.
Blockchain governance is important because it regulates activities occurring across the ecosystem and provides legal assurances that there arbitrary decisions will not be made as an abuse of power against other participants.
To achieve the true potential of blockchain, implementations must be seamlessly integrated with already installed software solutions.
However, major software and software-as-a-service (SaaS) providers are not offering blockchain solutions as add-on features to their enterprise solutions.
As a result, financial services organisations were paying a high cost for continuously maintaining and "reintegrating" blockchain implementations into their new and existing enterprise software solutions, Gartner said.
"As financial services companies constantly move financial instruments and assets to other financial services companies and partners, cross-industry interoperability standards are, and will be, critical," said Chesini.