Enterprise leaders will learn a new cross-industry model to understand and keep up with the acceleration of Blockchain and distributed ledgers.
We are at the beginning of a technological revolution. Blockchain technology has the potential to play a key role in the transformation of multiple industries such as financial services, manufacturing, retail, healthcare, government and energy to name a few.
On November 8, I will be presenting the keynote at Blockchain for Business and IT Leaders. My presentation will focus on an analyst's view of the disruptive potential of blockchain technology. Ahead of the upcoming November event, I would like to share the IDC Four Forces model for Distributed Ledger Technology (DLT) which looks at four forces driving technology and business innovation in multiple industries such as financial services, healthcare, retail, energy, manufacturing, and government. This blog presents the IDC Four Forces Model for DLT for financial services.
Enterprises can seize the opportunities to change their businesses with DLT in industries such as healthcare, retail, energy, manufacturing, and government. IDC has identified the four main change agents driving Blockchain technology and business innovation. These agents are what make up the IDC Four Forces of Distributed Ledger Technology (DLT) model:
1. Market participants: Market participants includes the companies that compete for customers in an industry or vertical market. For example, in financial services this includes banks, asset managers, brokerage firms, and insurance providers. Firms are investing in Proof of Concept (PoC) and pilot programs in the areas of compliance, trading, and trade financing. Looking ahead, IDC believes firms will continue to invest in Blockchain and believe we will see some test systems move to production in 2018.
2. Technology vendors and service providers: Technology vendors include hardware, software, and their professional service groups and partners. We have added service providers as a separate category to capture the role (and importance of) intermediaries. For example, in financial services, intermediaries such as exchanges and custodians provide industry specific transaction and post trade settlement services. Looking ahead, most technology vendors are expanding the software and services offerings for financial firms with a focus on compliance, trading and customer recordkeeping. Service providers are investing too, with a focus on operational improvements, especially in post trade settlement processing.
3. Agencies, regulators, and governments: Financial services is a heavily regulated industry and must comply with a myriad of rules and regulations from agencies, regulatory bodies and governments including central banks (or "regulators"). Multiple regulators have announced their interest in Blockchain, DLT, and smart contracts as a way to improve the security of transactions and markets to provide market protections for customers and financial institutions. Regulators must walk a fine line here in supporting Blockchain innovation while not appearing to favor a particular approach of provider, solution, or platform. Looking ahead, IDC recommends financial firms work closely with regulators to help in developing new rules and regulations that will be needed to keep up with Blockchain innovation.
4. Consortiums and collaborations: Consortiums such as Ethereum, the Ethereum Enterprise Alliance, and the Hyperledger Project are helping to lead Blockchain innovation in financial services and other industries. Many leading financial firms have announced collaborations with these consortiums, other firms, market participants, technology vendors and other leading Blockchain platform providers such as R3. IDC believes consortiums and collaborations will be critical to the success of Blockchain and smart contracts traction in financial services and other industries, especially given the interconnectedness of systems and processes between firms, customers, intermediaries, and suppliers.
How Enterprise Leaders Can Begin to Use the Four Forces Model for DLT
DLT presents a multitude of business and technology challenges and opportunities for your company and industry. Examine and evaluate them. Those who begin assessing now can be ready for the challenges and opportunities that come their way down the road as DLT accelerates.
Blockchain for Business and IT Leaders will explore additional use cases, where you can chat with myself and learn more about how leading companies are tackling their projects and initiatives. Click here to register.
For the full findings on my Four Fours Model in Financial Services, please refer to the IDC report, "Perspective: The "Four Forces" Driving Distributed Ledger Technology Innovation in Financial Services" (Doc #US41944516) on IDC.com.