97% of financial services leaders believe they’ll lose opportunities for competitive advantages if they don’t integrate blockchain into their operations. But how exactly do you do that?
More industries are adopting blockchain to improve operations, increase transparency and security, and create better experiences for their customers. However, many business leaders who are ambitious about blockchain may not know where to begin, or, if they’ve started experimenting already, many have stalled out. Business leaders already using blockchain expect to see a 23% ROI five years out, and a 65% ROI in ten years – but how do you get there?
7 Challenges Preventing Blockchain Experimentation
Despite the value that blockchain brings to operations and customer-facing features, many organizations aren’t prepared to roll out a Blockchain Transformation journey today. In our recent report on “State of Blockchain Transformation in Supply Chain” respondents whose organizations have already experimented with blockchain and those who have yet to begin with blockchain reveal what’s holding them back.
Integrating blockchain into legacy systems: Those who have already experimented with blockchain say their biggest challenge is successfully integrating those projects into their current systems, operations, and networks.
Technical limitations and scalability issues: Another challenge for blockchain experimenters is having their project stalled by a lack of technical know-how, or not having the technology or expertise to scale the project.
Lack of clear understanding: For those who have not yet experimented with blockchain, one hurdle is having a clear understanding of how blockchain works, how it will benefit their organization, or which use cases to implement.
Security concerns: Despite its increased security benefits, those who have not yet experimented with blockchain cite security concerns and their mistrust that it could be as secure as their current systems.
Regulatory and compliance concerns: Both groups say they’re challenged by understanding the regulatory and compliance landscape around using the technology – especially important in highly regulated industries like financial services.
Having the budget for blockchain: Another challenge for both groups is having the funds to move forward with blockchain experimentation. This could be due to a lack of understanding of how the technology will benefit the company or seeing low ROI on initial projects.
Finding the right tools and platforms: Finally, both groups say they’re challenged by finding the right tools and platforms that can help them effectively build and launch blockchain projects, as well as a lack of development resources and expertise in-house.
5 Steps to Overcoming Blockchain Challenges
While these challenges may seem daunting to those unfamiliar with blockchain technology, they’re not insurmountable. By embarking on a holistic Blockchain Transformation that addresses not just the technology, but the people and processes involved as well, organizations who want to embrace blockchain can find success with the following steps.
1. Understand How Blockchain Provides a Competitive Advantage
In our report, those who were convinced that blockchain provides a competitive advantage were more likely to experiment with blockchain, invest in projects, and set themselves up for future success. How can blockchain provide a competitive advantage? Those surveyed said the top blockchain benefits they experience are security, scalability, and transparency. Blockchain can also:
- Make transactions more secure and transparent
- Create a shared source of truth based on standards, protocols, and processes
- Improve security with distributed consensus-based systems and limited points of failure
- Reduce counterparty risk through higher transparency and real-time data
- Lower operational costs through automation, baked-in compliance, and reduced fees
2. Define Your Blockchain Goals and Choose the Right Use Cases
As with any major organizational change, determine your objectives and goals for blockchain implementation, as well as pick your use cases. One of the hurdles mentioned above by those who haven’t yet experimented with blockchain is a lack of understanding of how they would implement it. From our report, respondents said that blockchain use cases include Environmental, Social, and Governance (ESG) reporting and monitoring, data sharing and interoperability, streamlined payments, real-time tracking, IoT integration, quality assurance, and compliance.
3. Invest in the Right Tools and Technologies
Many of the hurdles above center around the lack of developer tools, technologies, or in-house expertise to build blockchain projects and integrate them into existing systems. However, investing in the right Blockchain Transformation platform can help lower those hurdles immensely. With a variety of templates, customizable smart contract libraries, integration assistance, and other features, these cost-effective platforms abstract much of the complexity so that even minimally experienced developers can start creating blockchain projects.
4. Build and Train Your Blockchain Teams
Since everyone in your organization should have a hand in advancing and using this new technology, build your blockchain team with front-end developers, UI developers, industry experts, project managers, and others both inside and outside of the IT department. Then, empower your teams with the blockchain knowledge they need. Turn to new blockchain partners or platform vendors to assist in that upskilling so that “a lack of knowledge” is no longer a hurdle.
5. Measure Your ROI for Increased Buy-In
Finally, as you plan and launch your projects, track and measure their ROI in areas like operational efficiencies – for example, the WEF found that by using blockchain in their supply chain, an oil and gas company could see an expected reduced freight spend of 5%, up to $100 million – as well as application lifecycle savings and incremental revenue from improved customer engagement. This will not only help you see the impact of your project and make improvements for next time. It will help others see the benefits of your projects, which can increase buy-in from leadership, leading to bigger budgets.
Leaping the Hurdles to Blockchain Transformation
Blockchain has the potential to transform the future of supply chain management – but only if supply chain leaders can lower the hurdles around technical limitations, developer tools, organizational knowledge, use cases, and a lack of budget. However, taking steps today to embark on a Blockchain Transformation can help you realize the ROI and benefits that blockchain can bring tomorrow.
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