Blockchain to enter the mainstream by 2025
Written by Hannah McGrath
Blockchain will enter the mainstream as a leading supply chain technology in 2025, according to a new study by Capgemini, which found that investment in the distributed ledger technology (DLT) is likely to grow by 30 per cent in the next three years.
A survey of 450 financial services organisations worldwide found that far from taking the slow-start approach to the DLT, early adopters of blockchain are doubling down on their investments, with 60 per cent saying that blockchain has transformed the way they collaborate with partners.
However, while just three per cent of companies have deployed blockchain at scale so far, 10 per cent have a pilot in place and 87 per cent said that they were in the early stages of experimentation and proof of concepts with the technology.
The survey predicted that blockchain will become normalised in 2025 following a period of experimentation which reaches its peak in 2020.
The UK is currently leading the way in blockchain experimentation, with 22 per cent of the total at-scale and pilot implementations, followed by France on 17 per cent. The USA leads the field in funding blockchain initiatives, on 18 per cent of implementations.
Blockchain technology records blocks of data and documents on a ledger stored across a network of computers which independently verify these blocks by solving a cryptographic puzzle. Once verified, the blocks of data are immutable and stored permanently on a public or private network.
The report identified 24 use cases for blockchain across companies in the retail, manufacturing and consumer industries ranging from trading carbon credits, manager supplier contracts and preventing counterfeit and fraud. It is most commonly being deployed to trace the production, provenance and inventory of contracts.
A number of consumer product organisations including Nestlé, Unilever and Tyson Foods have begun implementing blockchain trials. In the UK, consumer product organisations account for 43 per cent of all trials recorded by the survey, followed by manufacturing at 30 per cent and retail at 27 per cent.
Last week European supermarket giant Carrefour announced it was joining IBM’s blockchain-based Food Trust platform to enable customers to trace their food’s journey from producer to shop.
Meanwhile in banking applications, Natwest today announced it had integrated with a new blockchain-based platform to streamline the global syndicated loans market.
Amongst the top reasons for testing a blockchain solution across all industries, 93 per cent of UK companies asked cited cost saving as most important - versus a global average of 89 per cent - second for UK companies was reducing risk on 87 per cent, followed by increasing revenues at 85 per cent.
Only 36 per cent of UK companies said traceability was their motivating factor for deploying blockchain – a marked difference with the worldwide results, which showed 81 per cent thought blockchain was best put to use to trace provenance of goods, produce and contracts.
In a similar vein, 30 per cent of UK companies cited enhancing transparency as their blockchain driver, versus a global average of 79 per cent.
Despite the industry-wide hype and levels of optimism surrounding blockchain, the survey found that concerns remain around return-on-investment (ROI) and interoperability between partners in a supply chain.
A large majority (92 per cent) of companies leading the charge for blockchain adoption said that ROI presented the greatest challenges, while 80 per cent said interoperability and legacy systems were a major operational challenge.
Security of transactions was also flagged as a concern for 82 per cent of respondents, which inhibits cross-network adoption of blockchain applications.
Sudhir Pai, chief technology officer for financial services at Capgemini, said, “There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organization’s supply chain challenges.
“Blockchain’s ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption,” he continued, adding: “Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realize its potential.”