Even as crypto-currency rates collapse, Blockchain technology continues to attract attention, particularly from the financial industry. Over the next few years, investment strategies in this technology will continue to grow, particularly in the form of equity investments in promising start-ups in the sector.
Open forum
DIn a climate of "blockchain bashing" where this promising technology is sometimes criticised, both traditional institutions and new players continue to develop increasingly innovative projects. The figures prove it: according to IDC forecasts, investment in Blockchain solutions is expected to grow by a staggering 70% per year between now and 2022, rising from $1.5 billion to nearly $12 billion in just five years. [1].
Finance, the driving force behind the Blockchain boom
The financial industry is particularly affected by this boom. As the largest market for Blockchain today, the industry will undoubtedly see an explosion in the number of Blockchain projects and solutions over the next decade. A recent study by IHS Markit estimates that revenues generated by this technology applied to finance will exceed $100 billion in 2024 and reach $462 billion in 2030. [2].
The reason? The gains expected from the elimination of certain intermediaries in markets with huge amounts, such as OTC derivatives (over $500 trillion a year) or global stock markets (over $70 trillion in market capitalization). Not surprisingly, the financial sector currently accounts for more than one-third of spending on this distributed registry technology, or $552 million in the first six months of 2018. [3].
An increase in the number of shareholdings
This investment is clearly reflected in the increase in equity investments and acquisitions in Blockchain startups. According to a survey by the investment bank JMP Securities, this type of transaction increased significantly in 2018, showing an increase of 209%. This is despite the fact that transaction amounts are still low.
In this investment race, the major banking groups are far from being the last. Beyond their involvement in consortiums such as R3 or Digital Asset, like Société Générale, BNP Paribas, Goldman Sachs or JP Morgan, these players are clearly deploying an investment strategy in the start-ups of the Blockchain.
One of the latest examples is that of ING and BNP Paribas, which both chose to invest last June in TradeIX, a British Fintech that has developed with R3 an open platform dedicated to international trade finance. At the beginning of 2018, it was another British company, Setl, which convinced Crédit Agricole and Citigroup with the development of a payments and settlement infrastructure that allows the exchange of assets or cash. Citigroup is one of the pioneers of this trend, and had already invested in Chain in the summer of 2015. For this banking giant, the Blockchain technology clearly meets its need to provide improvements and answers to its clients' new issues. There is no doubt that in the next decade, more players, not only in the US but also in Europe and Asia, will follow suit.
Clément FrancommeCEO ofUtocat
1] Source: "Worldwide Semiannual Blockchain Spending Guide", International Data Corporation (IDC), July 2018.
2] Source: "Blockchain in Finance Report - 2019", IHS Markit, February 2019
3] Source: "Worldwide Semiannual Blockchain Spending Guide", International Data Corporation (IDC), July 2018.
