Blockchain market size in banking and financial institutions to grow 15x to $22 billion by 2026
31 Mar, 2021 CryptoParrot
The emergence of blockchain technology continues to highlight the potential in revolutionizing different sectors. At large, the banking and financial industry is among the primary beneficiaries, as exhibited by the projected market size.
Banks are looking into the technology as it offers the potential to solve some pain points like cross-border payments and the high transaction costs.
Data presented by cryptocurrency trading simulator Crypto Parrot indicates that the blockchain market size in banking and financial institutions is projected to grow at least 15 fold between 2021 and 2026, from $1.45 billion to $22.46 billion. On average, the market size is estimated to grow by almost 74% annually. The estimated data is provided by Clifford Chance’s Blockchain Revolution 2020 report.
Why banks are likely to prioritize blockchain technology
The projected growth in market size is in line with blockchain technology's popularity based on its benefits to the banking and financial sector. Banks and other leading financial institutions are still ramping up tests to develop blockchain-based technology to run some of their most tedious processes.
The tests will likely materialize in the coming years, offering actual use cases in return contributing to the surge in market size. Most of the solutions under research cover the entire business chain from internal organizational processes to the client's end.
Financial institutions are also hoping on the technology due to the high level of security it guarantees. The shared ledgers can secure transaction data while lowering the risk of stealing transaction information or diverting payments.
Furthermore, blockchain also improves data quality as it allows for access to data based on predefined rules and regulations. Moreover, the technology offers room for easy reconciliation of transactions. They can be traced more quickly while locating errors promptly.
Although there is no uniform cryptocurrency regulation outlook globally, proponents remain hopeful that different authorities will legalize digital assets as part of the broader financial sector. Financial sector players will likely bet on blockchain to support crypto transactions in the future if legalized. Notably, some countries are even researching digital versions of their local currencies powered by blockchain and managed by central banks.
Blockchain and the regulatory hurdle
Despite the optimism around the role of blockchain in the banking and financial industry, the issue of regulatory hurdles cannot be ignored. To realize the technology's full potential, all players globally need to be on the same page. However, the likelihood of some jurisdictions banning the technology will hamper its widespread application.
In general, there are many benefits linked to blockchain technology in the banking sector. Worthing nothing is that some of the benefits are yet to be fully explored as more research is still ongoing. However, there seems to be a consensus that blockchain technology allows banks and financial institutions to offer better service and more security to customers.
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