'Lack of business case' to blame for low DLT investment

Despite 92 per cent of financial services firms investing in Distributed Ledger Technology (DLT), more than half (55 per cent) expect to invest less than £10 million.

This is according to a survey of 364 blockchain professionals within financial institutions by FinTech Connect, which noted that when they were asked why, 63 per cent cited the lack of a ‘clear business use case’ as a key reason for not investing more time and resources into blockchain technology.

The slow pace of ‘due diligence’ compliance and on-boarding was referenced by 73 per cent of respondents as an obstacle of widespread blockchain adoption.

This, combined with a lack of understanding across global markets, or misconceptions around blockchain or cryptocurrency technology, have created a hesitation within the industry to invest larger funds, according to the research.

Data from the report also demonstrated doubt around how asset-backed cryptocurrencies, like Facebook’s Libra initiative, will impact the blockchain market. More than a third of respondents said that Libra will impact the long-term future of digital assets like Bitcoin, while 80 per cent believe a compromise between private and public blockchain technologies will soon be needed.

However, while the data did reveal areas of concern, 65 per cent of blockchain professionals said there will be heavy adoption of blockchain in the future, with 55 per cent stating that Libra is putting a spotlight on the technology, which will result in wider adoption.

Steve Clarke, founder and managing director of the FinTech Connect conference, said: “Over the last few years, there has an incredible hype train dictating the pace of blockchain technology; yet from this report we can see there is still a big question mark over what impact it is going to have.

"This uncertainty is curbing progress – investment is rolling in steadily but nobody is prepared to take the plunge," he continued, adding: "Until there is greater cross-collaboration between established players and new entrants, and proven use cases emerge as a result, the market will remain cautious and the industry will struggle to fulfil its potential.”

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