Nearly three-quarters of banks and asset managers see the consortium model as necessary for exploring distributed ledger tech, according to a new survey released last week.
For the survey, international law firm Simmons & Simmons polled 200 C-suite representatives as part of a larger exploration of how they view financial technology opportunities. Notably, while most were positive about the consortium model, there were hints that there may be some weaknesses to the approach.
For example, 60% reported some existing consortia have too many participants, while 68% expressed a desire to have more control over the work ongoing in these groups.
Further, 40% reported a belief that joining an industry consortium could have a negative effect on their firm’s competitive advantage, with 38% asserting that they’d rather focus on internal solutions to new technology challenges.
Yet, report author Angus McLean also noted the operational difficulties inherent in this sentiment, given that it’s widely believed blockchain and distributed ledger systems require a network effect to reduce costs and offer benefits.
“For distributed ledger-based solutions, for example, there is little point in having systems that work for only a small segment of the industry. The value is generated by enabling a network effect.”
In this way, the report cited the work unveiled last year by Utility Settlement Coin – a project UBS, Deutsche Bank, Santander, BNY Mellon and ICAP made public last year – as an example of a consortium it believes may be the right size in the current climate.
Still, the survey provides an interesting glimpse into the sentiment among banks participating in consortia efforts, perhaps shedding light on the future challenges to the model.