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.
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