Australian finance sector not as keen on blockchain as hype suggests: Gartner

Gartner has highlighted that curiosity is keeping the sector aware of the technology, but risk aversion is stopping it from being an investment priority.

Chief information officers from Australian banking and investment services are focusing their resources on business insights and analytics, and not so much on blockchain-based technology, a survey from Gartner has found.

Despite the attention and visibility around the distributed ledger technology (DLT), the analyst firm said blockchain is not yet seen as a differentiating technology for banks, with the CIOs participating in Gartner's 2018 CIO Agenda: Banking and Investment Services Industry Insights survey placing blockchain as investment priority number 20.

Speaking with ZDNet while in Australia for the Gartner Symposium/ITxpo on the Gold Coast on Monday, UK-based managing VP of the Banking and Investment Services Research team at Gartner Peter Redshaw said banks around the world are hesitant to promote the priority of blockchain investment within their organisation as they are unclear of the promise -- if any -- that it holds.

"You've got to distinguish between the promise of what it can do, and what it's capable of doing right now -- the future versus the current and separate between the hype and the reality," Redshaw explained.

"Blockchain is the hottest topic, it's right at the top of the peak of inflated expectation. However, everything that they're doing is just a proof of concept, or a pilot or prototype, they are not in production -- the only example that is in full scale production in financial services is bitcoin."

As highlighted by the 354 CIOs surveyed by Gartner, Redshaw said blockchain-based technology is not a priority at the moment, because they cannot monetise it, nor run it at scale.

"There's lots of interest, but it's at the laboratory level; it's all in the backroom, they haven't rolled it out, they haven't figured out how to run it at scale, they haven't figured out the use cases to make a lot of money, or exactly how they would monetise it," he explained, noting the financial services players know it's an answer, but they don't know what the question is.

"People like to follow the taillights of the car in front when the way ahead is unclear."

The banking community made it clear why it keeps abreast of blockchain during a recent roundtable that Gartner facilitated, according to Redshaw. One participant explained that he never saw PayPal coming until it was too late, and he was involved in the DLT space because he wanted to see the next PayPal coming, Redshaw said.

"Somebody will crack the code, somebody will be the next PayPal. Everyone is busy experimenting, building maturity, making sure they're ready to react really quickly when it does take off," Redshaw added.

Although blockchain technology isn't the top priority for the CIOs surveyed, Gartner has predicted the banking and securities sector in Australia to still spend AU$15.1 billion on technology products and services in 2018, up 4.5 percent from this year.

Coming in second place to BI and analytics is digitalisation/digital marketing, which was highlighted by 21 percent of CIOs as the top tech to win in the financial services space.

Mobility or mobile applications was the next priority with 11 percent; followed by artificial intelligence and cloud services or solutions with 8 percent each; then legacy modernisation, APIs, and CRM on equal investment priorities, with 4 percent respectively; and automation and omnichannel/multichannel rounding out the top 10 priorities with 3 percent each.

When it comes to strategic business priorities, the survey found that digital business or digital transformation is more important for banking, with 26 percent of respondents flagging it as their first priority.

Disclosure: Asha McLean travelled to Gartner Symposium/ITxpo as a guest of Gartner.

PREVIOUS AND RELATED COVERAGE

ANZ bank to focus on the less glamorous side of blockchain

The bank is taking the more responsible path and getting its ducks in line before investing further in blockchain-based technology.

House of Reps committee ponders taxation on the blockchain

With the emergence of blockchain potentially requiring the government to find other means of tracing the income and assets of organisations and individuals, a House of Representatives committee has toyed with the idea of the ATO heading down the distributed ledger path.

Gartner increases 2017 global IT spending forecast as US dollar declines

The research firm says that it expects worldwide IT spending to increase 2.4 percent to $3.5 trillion in 2017.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All