The financial services industry is spending around $1.7 billion a year on blockchain, as banks and other firms move beyond the proof-of-concept stage and begin rolling out commercial products.

This is according to a new study from Greenwich Associates, which surveyed 200 market participants on blockchain budgets, team sizes, use case exploration, key challenges and other issues.

The results showed that blockchain budgets increased 67 per cent last year, with one in 10 of the banks and other companies now reporting blockchain budgets in excess of $10 million. Headcount dedicated to blockchain initiatives doubled in 2017, while a typical top tier bank now has about 18 full-time employees working on the technology.

Some 14 per cent of the banks and other companies in the study claim to have successfully deployed a production blockchain solution. Although early tests showed the potential of distributed ledger technology (DLT) across a range of important functions like creating revenue opportunities, shortening settlement time and reducing risk and cost of capital – cost reduction has emerged as the biggest driver of blockchain investment and development for financial service firms.

Richard Johnson, vice president of Greenwich Associates market structure and technology, said: “More than half the executives we interviewed told us that implementing DLT was harder than they expected. Nevertheless, more than three-quarters of projects currently under development are expected to be live within two years.”

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