Banks in EMEA Miss Out the Potential of Blockchain, with Only 19% Benefiting from the Technology
More than 69% of banking institutions in EMEA (Europe, Middle East and Africa) could miss opportunities in the financial market over the next 24 months if they do not embrace digital transformation. Currently, only 19% of them are making efforts to keep up with technological advances.
Since the start of the Covid 19 pandemic, most governments have discouraged the use of paper money to contain the spread of the virus, which has cost banks dearly – especially those that had not yet switched to mobile banking.
The pandemic caused great instability and high volatility in global capital markets. The entire financial industry was hit hard, causing bank valuations to fall in every country around the world. Thanks to the pandemic, banks around the world realized the need for a digital banking offering.
More than half of US banking institutions are looking into blockchain technology, especially in the payments space, to transform cross-border payments and reduce costs. On the other hand, financial institutions in the EMEA region are far less progressive, according to the survey conducted by Mambu and The Financial Times Focus. Only a small proportion of them are using blockchain in their services. Another 10% of them are exploring the potential of the technology, while the majority are not considering any innovations so far.
Interestingly, the employees of these banks themselves believe that the financial sector will digitize and replace traditional finance. According to the survey, 75% of banks (more than 500 senior bank respondents) believe that tech giants like Google and Amazon will take the lion’s share in the banking sector by 2026 (the next half decade).
Blockchain increases productivity
Due to the rise of fintech companies, the growth of digital services, and the rapidly increasing number of digital-savvy customers, most banking institutions around the world are being forced to invest in digitization, including the use of blockchain technology.
Most banks are looking to use blockchain because the technology offers a secure, transparent, fast and economical way to send and receive payments that bypasses the need for intermediary verification and blockchain-based transfers take less processing time than traditional bank transactions. About 90% of European Payments Council members are optimistic that distributed ledger technology (DLT) will fundamentally change the financial sector by 2025.
As the banking sector, healthcare sector, chemical industry, ICT and other industries are trying to recover, blockchain technology is in high demand as it is seen as a potential solution to digitization problems. North America has the largest share in the DLT tech market. According to the report published by Market Watch, the DLT tech market is expected to grow at a CAGR of 44% by 2023 and is expected to generate revenue of over $9.51 billion in the next 2 years. Canada is expected to register the highest CAGR.
Generally, the adoption of DLT in the banking sector will improve bank performance and productivity and reduce operating costs. This will ultimately contribute to the unparalleled growth of the financial industry.
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