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Journal of Global Operations and Strategic Sourcing

ISSN : 2398-5364

Article publication date: 4 March 2021

Issue publication date: 15 July 2021

The purpose of this study is to thoroughly review studies that have used blockchain technology in financial services. This study will help provide a holistic framework that would highlight the current state and challenges of the blockchain in the financial services sector.


The objective of this study is to systematically examine and organize the current body of research literature that either quantitatively or qualitatively explored the use of blockchain technology in financial services. The study uses PRISMA-guided systematic review along with bibliometric analysis to achieve the purpose.

This study contributes to the existing literature by exploring and analyzing systematic studies available on blockchain with special reference to financial services sector. With blockchain based on five principles, namely, computational logic, peer-to-peer transmission, irreversibility of records, distributed database and transparency with pseudonym has immense potential to unleash and transform the financial service industry. With increasing blockchain-based operations of decentralized banking, insurance, trade finance, financial markets and cryptocurrency market, the subject is rapidly growing and seeking considerable contribution from scholars from around the world.

Research limitations/implications

This study uses systematic literature review approach, which has its own demerits. Like other studies based on Systematic Literature Review, this study also suffers from a certain bias such as sample selection bias, publication bias, data interpretation and the combination of quantitative and qualitative studies in the population. Further, the adoption and resultant benefits of blockchain have not been empirically tested.

Practical implications

This study can help policymakers and institutions in determining their future course of action, as it highlights the state of research in the area of blockchain technology and financial services.


Very few studies have done a comprehensive review of literature on blockchain in financial services.

  • Qualitative
  • Financial services
  • Financial inclusion

Pal, A. , Tiwari, C.K. and Behl, A. (2021), "Blockchain technology in financial services: a comprehensive review of the literature", Journal of Global Operations and Strategic Sourcing , Vol. 14 No. 1, pp. 61-80.

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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Blockchain in financial services: current status, adoption challenges, and future vision.

  • Anisha Miah , 
  • Mohamed Rahouti , 
  • Senthil Kumar Jagatheesaperumal , 
  • Moussa Ayyash , 
  • Kaiqi Xiong , 
  • Fredery Fernandez , and 
  • Modupe Lekena

Fordham University, New York, NY, USA

Search for more papers by this author

E-mail Address: [email protected]

Corresponding author.

Blockchain is undoubtedly considered one of the most innovative technologies in financial services from the past decade. Interests in blockchain technology continue to grow on a daily basis, while many promising blockchain-enabled applications and services continue to draw financial interest in the industrial sector and the broader financial services communities. Blockchain technology has the potential to streamline lending services and banking, decrease counterparty risk, and reduce settlement times and issuance. It indeed enables authenticated documentation and anti-money laundering (AML)/Know Your Client (KYC) data, minimizing operational ventures and allowing real-time/online validation of financial documents. Furthermore, as blockchain matures, it increases the value of a diversified range of industries and institutes with a better return on investment. However, such organizations must continue to adopt rigorous approaches to enhance their financial services and regulate their policies. In this article, we discuss the current status of blockchain-enabled financial services and applications, in addition to the impacts, implications, and regulations of incorporating blockchain technology in the finance industry. We further tackle the adaptation model for blockchain technology in global banking and provide a vision for the next generation of financial services based on this emerging technology.

  • cryptocurrency
  • decentralized finance
  • financial services

1. Introduction

Blockchain technology is undoubtedly the most important innovation to come out of late 2008 as blockchain-based cryptocurrencies such as Bitcoin and Ethereum, have dominated the financial world. With the various use cases of blockchain across several industries, the financial service realm requires much more guidance and regulated integration models before jumping onto the new technology bandwagon [ Karim et al. ( 2022 )].

Blockchain technology is a distributed shared ledger that is designed to replace a centralized structure with a decentralized one by incorporating algorithms [ Rahouti et al. ( 2018 )]. This ledger technology is immutable and stores information about transactions and assets where no single entity is in charge. This unique technology eliminates the need for a third party to authenticate processes. Instead, it operates through a distributed register with universal authentication (Fig.  1 ). Its best-known application is Bitcoin, a cryptocurrency that employs blockchain to enable users to perform transactions without third-party intervention. While this technology is still relatively evolving and in its emerging stages, it is thought to have the potential to deliver a new strain of innovation to the financial world and in financial technology (FinTech) [ Smith et al. ( 2022 )].

Fig. 1.

Fig. 1. Block structure within a blockchain network.

Essentially, blockchain is considered an ideal solution for information and data delivery as it enables not only immediate but transparent and shared information, which could be accessed by permissioned network participants only [ Zheng et al. ( 2018 )]. Since every participant in the platform shares a common (single) view of the truth, the details of an end-to-end transaction can be easily traced, providing the users in this network with assurance as well as new efficiencies.

1.1. Scope of the paper

Blockchain technology, in general, brings vital improvements over the traditional centralized approaches in different perspectives for financial services. First, it improves the trust prospects of financial services with a better return on investment. Consequently, some features that might not appear to a human view can be extracted with ease by completely adapting the core features of blockchain and its enabling technologies. For the financial services industry, blockchain technology is a potential path to cheaper, automated, and higher security contracts.

In this paper, we review a wide range of blockchain services and explore the financial applications that have benefited from blockchain technology. The paper identifies the impacts of blockchain, its benefits, and challenges in different blockchain-enabled financial services. It also discusses the characteristics of the blockchain market and current market situation, in addition to presenting the adaptation model for blockchain technology that various government agencies and financial institutions could use for deploying trustworthy financial services. Moreover, a robust blockchain framework is provided in order to help lending and banking institutions understand the advantages and challenges of blockchain and smart contract implementations in their organizations and services. Finally, this survey also explores the details of the vision of blockchain for various future financial services.

1.2. Related papers

Researchers in both academic and industrial sectors have been exploring and investigating the various opportunities that blockchain technology brings to different financial applications, such as the integration of blockchain in the mortgage lending process [ Ali and Smith ( 2019 ); Pamnani et al. ( 2022 )]. In a similar context, another area under investigation for blockchain implementation is the monopolistic credit reporting arena [ Hassija et al. ( 2020 ); Patel et al. ( 2020 ); Mattedi ( 2020 )].

Further, FinTech companies are being established on a worldwide scale. National security experts are tracking these developments as they sense that a lack of involvement from developed countries can bring significant national security risks [ Rosenberg et al. ( 2019 )].

To the best of our knowledge, there is no significant literature dedicated to the survey of the specific implications of blockchain for a large range of trustworthy financial services. There are few works presenting common usage of blockchain technology that has been used in certain minimal economic aspects. The work presented in Wang et al. [ 2020 ] focused on blockchain approaches in financial trust mechanisms. However, this work did not consider the broad range of blockchain applications from a market perspective and adaptiveness, which is the focus of our survey.

Liu et al. [ 2021a ] reviewed different classes of applying blockchain technology for addressing the primary financial market and discussed the potential of using these technologies in future financial markets. Nonetheless, they also did not study the role of blockchain on the adaptation aspects and diversified range of market status. Further, the work by Schär [ 2021 ] provides a survey of decentralized finance (DeFi) for smart contract-based financial markets. In that work, the potential risks of a DeFi ecosystem, such as asset management protocols, decentralized exchanges, and debt markets are highlighted. This work focuses on robust and transparent financial services, while our work is not wholly dependent on DeFi, but includes it as one of the core concepts in the applications of blockchain-enabled financial services.

Further, Xu et al. [ 2019 ] addressed the economic benefits of using blockchain technology. While this work primarily focuses on clustering analysis considering various themes, it differs from our work on the usage of blockchain for a wide range of financial services. Beyond the specific works on blockchain, Chen and Bellavitis [ 2020 ] reviewed decentralized business models along with several empowerment strategies, including a transparent and distributed trust for decentralized financial services. Furthermore, they have also summarized the challenges and limits in achieving the full potential usage of DeFi. Finally, a comparison summary between our paper and related works is presented in Table  1 .

Summary of existing surveys related to blockchain-enabled financial services.

Refs.YearFinancial services reviewDeFi reviewMarket statusAdaptation aspectsFuture visionsInsightsFocus
[ ]2015 Applicability of bitcoin blockchain in the financial market infrastructure
[ ]2016 Applicability of blockchain in financial and commercial applications and associated implications
[ ]2016 Functionality of blockchain and its impact on financial services (Blockchain 2.0)
[ ]2018 Influence of blockchain on finance, challenges, and associated trends
[ ]2019 Themes related to economic benefit, blockchain, FinTech revolution, and sharing economy
[ ]2020 Blockchain and its applications in the financial and economic field, status and challenges
[ ]2020 Impact of DeFi, current business models, and their associated challenges
[ ]2021 Technical basis of blockchain financial model and application scenarios in the financial market
[ ]2021 Opportunities and potential risks of the DeFi ecosystem

Last, the remaining of this paper is organized as follows. Section  2 discusses the key components and enabling technologies of blockchain and their contributions to industrial services. Section  3 reviews the DeFi and Sec.  4 provides an overview of the literature on blockchain technology in financial services. Next, Sec.  5 explores the impact of blockchain on the market segments, focusing on the primary market, secondary market, and clearinghouse. Section  6 provides insights about adaptation models for blockchain in global banking services along a robust framework for blockchain-based banking and lending services. Section  7 gives a vision for the future of blockchain in financial services. Finally, Sec.  8 concludes the paper.

2. Features and Applications of Blockchain

Blockchain has become an important solution to break the bottlenecks involved in financial services by virtue of its advantages of decentralization, immutability, auditability, and fault tolerance. In this section, a brief overview of the key features and primary advantages of blockchain technology is presented at first. Following that, the appealing characteristics of blockchain for various applications are discussed. Further, types of blockchain implementations, along with their programmable capabilities through smart contracts, are discussed.

2.1. Types of blockchain networks

There are a few types of blockchain networks summarized as follows:

Public blockchain network: It allows any user to join the network, allowing almost full transparency of all transaction details to all participants. Substantial computational power is required since the number of users is not limited and maintains a weak to moderate security structure. An example of this type of network is Bitcoin [ Zheng et al. ( 2018 )]. Public blockchain networks can also be set up as permissioned blockchain networks (Please see Permissioned blockchain networks below).

Private blockchain network: Although this network maintains a similar decentralized peer-to-peer (P2P) network like a public blockchain network, an organization is in charge of governing the network. This authority can control the number of participants, execute a consensus protocol, and maintain authority over the shared ledger. Depending on the scenario, this is a network best implemented for organizations where trust and confidence are highly prioritized [ Zheng et al. ( 2018 )].

Permissioned blockchain network: It is a network where restrictions are placed on users to participate in or view certain transactions occurring in the network. Users will require an invitation to join this network [ Zheng et al. ( 2018 )].

Consortium blockchain network: It is similar to a private blockchain network but with multiple entities sharing responsibilities of the blockchain maintenance. Pre-selected organizations are able to determine which participants have the authority to submit transactions or access data. A consortium blockchain deals with a scenario where all participants will need to have modified permissions and have a shared responsibility for the blockchain network [ Zheng et al. ( 2018 )].

2.2. Primary advantages and key applications of blockchain

A visualization of a process flow for financial transactions under blockchain setups is shown in Fig.  2 . Once a user submits a transaction, it is registered as a b l o c k of data. These blocks are then linked to form a chain, producing a b l o c k − c h a i n as more data is added. Besides holding data, blocks are responsible for holding time and sequence information which are then used to connect them in a series [ Laurence ( 2019 ); Ali et al. ( 2019 )]. Precisely, each block is contained as a h a s h , or a digital fingerprint, storing its previous block hashes so that the history of one transaction can be traced back to its very first block. This method deems blockchain as tamper-evident, lending to the key attribute of immutability [ Laurence ( 2019 )].

Fig. 2.

Fig. 2. Blockchain-based trade finance process flow.

After a transaction is completed, the shared ledger is updated and acts as the single source of truth. Therefore, once the new transaction is amended, all participants in the network receive a copy of this transaction and can view the transactions according to permissions provided to them in the network [ Cermeño ( 2016 )]. The key applications of blockchain technology are summarized next.

2.2.1. Data sharing

It has become customary to mention nowadays that data is a very precious resource and is considered to be a new form of money. This is mainly for enterprises that own data servers, connecting people and the community together. They are exploring new opportunities to extend the revenue stream beyond establishing connectivity. However, as more transactions happen, the volume of data collected will be huge, making the security of financial data more challenging. To reconsider the notion of value exchange and overcome the challenges existing in data sharing, blockchain has come to the rescue in all trusted environments. Blockchain can help the data handling enterprises reap financial rewards to a larger extent [ Chen et al. ( 2022 ); Tao et al. ( 2021 )]. It can reshape the industry by enabling trust, enhanced sharing of information, and improved opportunities to trace and track digital assets. Blockchain-based data sharing and data access control system provides masked data circulation, privacy data sharing, and internal data access control mechanisms. The masked data circulation provides intelligent data retrieval, authentication, authorization, traceability, and data circulation tasks [ Li et al. ( 2019 )]. Privacy data sharing innovates the authorization service flow for the user and shares the data according to the authorization credential by placing them on the chain [ Zhao et al. ( 2018 )]. Further, the internal data access control mechanism empowers the data access application, authorization, approval, and execution of procedures by introducing a smart contract for the realization of automated permission and control of the relative database access [ Song et al. ( 2021 )].

2.2.2. Data security

Blockchain can secure sensitive data in terms of storage enabled by breaking up data into chunks and encrypting them so that only the authenticated and authorized users can access these data. Cryptographic encryption of the data in a blockchain network gives way to the users to ensure that their data are untampered [ Zhang and Chen ( 2019 )]. Security is also imparted by distributing the files to a network so that all the files are available, even if a part of the network is down. However, the security is also limited by the size of the network [ Esposito et al. ( 2018 )]. If a blockchain network is not large enough or well distributed, it becomes vulnerable to attacks. Further, more redundancy of data may be needed than other storage solutions.

2.2.3. Trust

Predictability and accountability aspects of security concerns that are prevalent in handling vital data and resources need to be imparted with proper trust mechanisms [ Liu et al. ( 2021b )]. The trust and consensus delivered through blockchain technology stand in the topmost layer of the decentralization architecture. Such trust concerns play a crucial role, particularly in smart contracts, digital currencies, record keeping, and securities imparted through blockchain technology. It makes the users trust the services when no one is in charge of the transactions happening in the network. Multifaceted trust issues in the cryptocurrency ecosystem built using blockchain services [ ur Rehman et al. ( 2019 )] reveal the significant effort involved along with the potential solutions from the user’s and government’s perspectives. Further, the underlying topology also plays a vital role in trust enhancement. Hao et al. [ 2020 ] presented a P2P trust-enhanced blockchain topology for reliable and fast broadcasting and enables fast broadcast through a spanning-tree broadcast algorithm and analyzes the network loads.

2.2.4. Decentralized autonomous organization

One of the interesting forms of blockchain is that it enables new forms of distributed technology, which is anticipated to act as the heart of the social organization. This could be established by the decentralized autonomous organization (DAO) with the potential of blockchain to revolutionize human social institutions. A DAO is an organization that is managed through rules, coded in smart contracts, and run on the blockchain. Blockchain enables the provision of truly distributed organizations at a global scale, which runs by the rules defined by the members through a consensus process and is written into a set of contracts that run through computer programs [ Wang et al. ( 2019a )]. As DAO is an online platform community, its resources are organized according to the rules agreed upon in advance and implemented in the code. From the hierarchical structures, organizations have evolved to modern bureaucratic organizations, where businesses operate by the rules defined through programs automatically [ Hsieh et al. ( 2018b )]. It enables automated management of distributed organizations on a more technical level.

2.2.5. Decentralized finance

In DeFi, the financial services are transactions that could be made without any central authority [ Caldarelli and Ellul ( 2021 )]. DeFi requires decentralized infrastructure and platforms for writing decentralized programs. Ethereum can be used as one of the platforms for creating decentralized apps. Decentralized exchanges are also being built on Ethereum platforms, which can be completely autonomous and provisions free access for all exchanges [ Wang et al. ( 2021 )]. Furthermore, decentralized money markets also could connect borrowers with lenders and assist in providing autonomous management of loan terms. We discuss in detail the selected works on DeFi in Sec.  3 .

3. Innovations and Activities of DeFi

From the development of Bitcoin to Ethereum, the financial industry now has a digital platform that provides trustless finance [ Chohan ( 2019 )]. Ethereum, offering a blockchain with computational capabilities, was a new frontier for blockchain-based financial services innovation. Such an innovation was followed by a series of novel cryptocurrencies and crypto-enabled services: Namely, Stable Coins via Maker, ERC20 Token exchanges, crypto-lending, borrowing, and staking (aka named DeFi Summer, and then liquidity mining via Compound finance). Some of these major concepts will be elaborated on in detail next.

3.1. Primary innovations of DeFi

The primary innovations of DeFi are summarized as follows.

Maker: Enabled the creation of a decentralized stable coin called DAI. It was initially backed by a single currency, ETH, but later became a multi-collateral stablecoin that could be created using any ERC20 token [ Darlin et al. ( 2020 )]. The key advantage of this stable cryptocurrency is that it enhances the predictability of currency and this topology allows for its broad use as a means of exchange in commerce.

EtherDelta and other distributed ERC20 exchange platforms: Enable currency holders to trade tokens with each other. The early iteration was based on an order book which was a popular system for managing the buy and sell sides of an exchange market [ Hsieh et al. ( 2018a )].

Uniswap: Created the first decentralized ERC20 exchange that did not require the use of an order book like traditional financial exchanges. Instead, it uses an Automated Market Maker, which allows for digital assets to be traded without permission and is automatic through the use of liquidity pools (LP) [ Wang ( 2020 )]. Uniswap is arguably one of the most important DeFi projects today.

Compound: A platform to orchestrate a Lending market. Members who save their digital assets on the platform can not only borrow out those assets but also loan using the saved money as collateral [ Ramos and Zanko ( 2020 )]. The advantage of this innovation is its allowance for the inception and usage of a liquidity program whereby users are paid to use the platform. This incentivizes users to issue more transactions on the platform, saving more funds or borrowing more assets. This innovation led to the realization of liquidity mining.

Yearn Finance: Automates the process of lending, staking, and farming. Through the usage of its multi-asset tokens, the underlying assets are automatically moved from one liquidity program to another based upon a predefined strategy written by the community to yield the most liquidity returns [ Schär ( 2021 ); Cousaert et al. ( 2021 )]. Another major innovation by Yearn is the release of its governance token, its total volume, to the market (without holding a portion of it for the founders or development team, resulting in boosting the price of this token in the past).

3.2. DeFi activities

As discussed above, there are various DeFi projects and activities related to the industry of financial services. In this subsection, we will review and discuss the practice of trading, storing or saving, lending and loans (including zero collateral loans), liquidity provisioning or staking, and lastly, yield farming, simply called farming.

3.2.1. Trading

One of the first activities enabled by the Ethereum platform was the ability to trade assets [ Notheisen et al. ( 2017 )]. Trading was initially performed using traditional trading techniques, colloquially called TradFi, a centralized entity to orchestrate and execute the trades between different parties, often using an order book. Upon the occurrence of smart contracts, on-chain currency trading was introduced. This led to the establishment of DeFi. Here, the deployment of blockchain to conduct trading removes the need for many intermediary trade management functions such as orderbook verification, online payment gateways, and stockbrokers (i.e. users manage their own assets while the blockchain manages to perform correct transactions).

The most notable types of decentralized exchanges are called LPs. LPs allow the exchange of cryptocurrencies without permission or authoritative control [ Capponi and Jia ( 2021 )]. Without the need to share their identity, users can perform a trade. LPs operate by creating pools of funds between two different types of currencies. Traders can then exchange one of two pooled tokens for another [ Crook ( 2019 )]. One type of LP is called an automated market maker, which prices the trades between pairs via a pricing function such as a constant function market maker (CFMM). In CFMM, a constant function represents the fact that any trade should change the reserves in such a way that the product of the reserves must remain unchanged (i.e. equal to a constant) [ Berenzon ( 2020 )].

The CFMM comprises three participants. (1) Arbitrageurs: maintain assets’ prices within the portfolio with respect to the market price (exchange for a particular profit); (2) LP: supply trades against their portfolio for a particular fee; (3) Traders: exchange one asset for another one. The CFMM is used in secondary market trading to efficiently represent the price of assets on the reference market. The function was initially implemented by Uniswap in accordance with the following equation : K = ( R α − D α ) ( R β + τ D β ) , (1) where R α / R β , D , and τ denote the reserves of each asset, the invariant reflecting the reserve’s value, and the transaction fee. According to this equality, trading any amount of either asset will update the reserves such that if the fee is zero, the product R α ∗ R β will stay equal to the constant K . Since Uniswap applies 0.3% as a trading fee charge (added to reserves), each trade will increase by K in practice.

Besides consensus instability, new challenges arise with the use of these trading facilities, such as front-running of trades and price slippage [ Zhou et al. ( 2020 ); Daian et al. ( 2020 )]. Due to the price changes that occur as a result of the constant function variation, large trades that would dramatically shift the price are susceptible to being front-run where other users submit trades ahead of large transactions in order to shift the cost of the manipulated trade, making it more expensive to conduct the trade. Another challenge that occurs when trading through LPs is the trading fees. This can cause some trades to no longer be lucrative to perform (e.g. when the trade fees dwarf the actual fund amount being swapped). Although there has been an immense effort to scale up LPs using off-chain or side-chain computations in order to lower the price, this remains a vital challenge.

3.2.2. Financial saving

Saving accounts are another well-known method for seeking greater yield on users’ funds. Similar to that of a traditional bank, a user can open a crypto savings account and store their crypto or fiat currencies [ Franz and Valentin ( 2020 )]. However, one of the important differences here is that these accounts do not have the advantage of being insured by the Federal Deposit Insurance Corporation (FDIC). Despite this, like most instruments in finance, with greater risk, there is a greater reward. These saving accounts may boast remarkably high interest rates (e.g. BlockFi, a cryptocurrency exchange, and wallet platform) [ Tsonev ( 2022 )]. Recently, saving in the crypto space has begun to take on a new meaning (see Staking and Liquidity Provisioning subsection).

3.2.3. Lending

Although previously available to some degree, lending was solidified by the creation of Compound finance [ Xu and Vadgama ( 2022 )]. In traditional finance, the available cash banks have to lend out to potential borrowers is based on the funds that other account holders placed in their savings accounts. Lending in DeFi follows a similar model except, in this case, the intention of offering funds to be borrowed is more intentional as users offer liquidity to the loan market. As a reward, loan liquidity providers receive interest on those funds. On the other side, users seeking to borrow funds have a large market from which they can borrow funds.

Users’ ability to borrow funds is completely based on their available collateral. That is, users’ borrow limit is based on the percentage of their available collateral. If the borrowing limit is 75% of one’s collateral, with $100 of collateral, the available borrow limit is $75. This unlocked two things; (1) users can now benefit as loan providers compared to in TradFi (a mobile/web application that allows users to invest in financial instruments [ Hirniak ( 2021 )]), where banks were the greatest winners as they created and facilitated the market. Here platforms like compound simply create coordination, but users are the supply and the demand of liquidity; (2) loans could be taken out at lower rates, and the qualifications of taking funds out are clear and consistent, simply being based on one’s available collateral.

3.2.4. Liquidity provisioning

The trading activities through LPs, saving on Maker, or lending in Compound share a more general approach in financial activity, Liquidity Provisioning [ Jensen et al. ( 2021 )]. In many of these platforms, a marketplace is created with a growing demand for liquidity to be supplied. A pair of tokens is provided herein to fund an LP or supply single or multiple tokens in a borrowing market [ Angerer et al. ( 2021 )]. To incentivize asset holders to provide liquidity, various liquidity programs have been launched to spur this market [ Voigt ( 2020 )]. An example of this is SushiSwap (i.e. a cryptocurrency exchange platform and automated market maker built on the top of Ethereum [ Barbereau et al. ( 2022 )]), a competitor to the Uniswap platform. To encourage users to provide liquidity on their platform, high-interest rates are offered to the new fund providers for a limited time window. This attracts liquidity providers to seek platforms that will offer a much greater return for letting them use their funds on the platform.

With the growing demand for liquidity provisioning, the primary aim is to fund positions with the greatest yield or interest rate. On the Uniswap platform, liquidity providers receive 0.3% in fees charged to users that perform swaps through the supplied LP. The proportion they receive of that 0.3% is dependent on the share of the total provided liquidity [ Neuder et al. ( 2021 )]. On Compound, each token has its own associated interest earned for liquidity providers [ Chu et al. ( 2000 )]. This interest is based on the demand for that particular token. Should the supply available be very low, the interest rate will reflect the need for greater liquidity provisioning and will boast higher interest rates. This is valid in the reverse case as well, where a large supply is backed with low-interest rates. Hence, there is an obvious competition to attract liquidity providers to the various available platforms.

Platforms seeking to attract more liquidity have developed programs called Liquidity Programs. In these programs, additional earnings are offered to users on top of the interest earned through liquidity provisioning [ Parizi and Dehghantanha ( 2018 ); Beller ( 2020 )]. These earnings often take the form of platform-specific ERC20 tokens. The offered platform-specific ECR20 tokens (often used for governance on the product) have remarkably benefitted liquidity providers seeking to improve their earnings (e.g. Compound platform). Here, the interest earned is defined when supplying a token to borrow with the ERC20 governance token, aptly called Compound. Other platforms similarly offer liquidity programs, with some being more aggressive in early paying out liquidity providers to jump-start new pools.

Liquidity provisioning is a highly important activity in the DeFi ecosystem. An important aspect to point out is that it can be a powerful tool not just for those looking to earn better passive income, but also for platforms needing to build better interoperability between their platform tokens and other available tokens [ Li et al. ( 2021 )]. It further enables the success of automated market makers, altogether becoming a cornerstone to the DeFi space [ Lo and Medda ( 2020 ); Aigner and Dhaliwal ( 2021 ); Angeris et al. ( 2019 )].

3.2.5. Staking

In the blockchain industry, proof of stake (PoS) has been studied and implemented for its benefits as a replacement for the proof of work (PoW) consensus algorithm [ Nguyen et al. ( 2019 )]. Staking, however, can also play an essential role as a financial investment tool [ von Wachter et al. ( 2021 )]. The idea of staking is to deposit funds to attest to the user’s participation in the block creation mechanism. If the user successfully creates the next block, they receive mining fees from the network. For instance, in Ethereum, the stake amounts are multiples of 32 ETH. Once staked, the probability a user gets chosen to attempt to create the next block is proportional to the amount they have staked compared to the total stacked volume. Once they create a block, mining fees are awarded.

Staking is a relatively straightforward pay-to-play model, and it can be a consistent way of supplementing a user’s portfolio. Within the Ethereum context, the possible risk to staking funds is in the event users’ funds are slashed. That is, the network imposes a penalty and strikes a portion, if not all, of the user funds. This event only happens if the user fails to produce a good block consistently. In other words, the user is repeatedly given an opportunity to extend the Blockchain with a new valid block, but they continuously fail to create a block, or they purposefully create bad blocks [ Scharfman ( 2022 )]. The objective here is to disincentive staking participants from becoming bad actors in the network.

Although staking and earning funds make financial sense, staking is designed and used for a more important role or incentivizing community contribution [ Harvey et al. ( 2021 )]. The activity of staking, locking up funds in order to participate in an activity, is also being used by projects to allow members to vote in important governance decisions. Here, projects use staking tokens, often referred to as governance tokens, to allow holders of those tokens to vote on decisions impacting the project [ Berg et al. ( 2020 ); Fan et al. ( 2020 )]. Participants willing to make a vote would lock up some funds to be allotted the right to make a vote. The weight of a vote is proportional to the portion of the staked governance token compared to the total volume locked. Once the participated activity ends, the locked funds are returned in addition to a reward for participation.

3.2.6. Yield farming

From a broader perspective, yield farming is the activity of constantly moving funds from one interest-bearing pool to another, constantly trying to place funds in positions with the most annual percentage rate (APR) in the corresponding week [ Scharfman ( 2022 )]. This means that funds could be placed in tokens with riskier positions, but they often have the highest return [ Cousaert et al. ( 2021 )]. For instance, a farmer sets 100 k USDT to be loaned out using compound finance. They will next receive 100 k cUSDT at a specific interest rate. The following week, if ETH has a higher interest rate, the farmer can move their loan position from the USDT to ETH to lock in the higher rate (which could happen multiple times a week/month). One downside here is that those funds (i.e. 100 k USDT locked) cannot be used while locked. The earnings can be further enhanced by taking the returned coin (the cUSDT for Compound), locking those funds in an exchange pool on Balancer (a trading platform and automated portfolio manager on Ethereum [ Raheman et al. ( 2021 )]), and earning trading fees on that platform (i.e. outdistancing further earnings).

Furthermore, liquidity programs can considerably supercharge field farming. With platforms aiming to attract more activities by issuing platform tokens to users performing those activities, yield farmers who are moving funds around on the platform, earn greater rewards for the moving actions performed on the platform [ Crook ( 2019 )]. This provides two key advantages; (1) increases a farmer’s earnings and (2) lowers the costs of transaction fees as each activity earns rewards that can reduce the overall cost of chain transactions.

Leverage can be used as a force multiplier in the DeFi space [ Kiong ( 2021 )]. When leveraging a position, the user depositing funds take loans against those deposits and repeats the process against the load assets. That is, the interest earned will be multiplied by the initial funds. With repeated loan and borrow actions, the user performs more liquidity mining, thus boosting the earnings. However, leveraging here also increases the risk on those funds as smaller movements in price and debt ratios have a higher effect on the user’s principle, possibly moving them into liquidation (i.e. there is no reward without risk [ Qin et al. ( 2021 )]).

4. Blockchain in Financial Services: Current Benefits and Challenges

The Blockchain technology’s potential to innovate the financial services ecosystem has been widely talked about, including its abilities for regulatory efficiency enhancement (i.e. real-time-based financial activities monitoring), facilitation and simplification of operations simplification, reduction of counterparty risks (i.e. execution of agreements in a shared and immutable environment), disintermediation for settlement and clearing of transactions, and lastly transparency and fraud reduction in both capital raising and asset provenance [ Niforos ( 2017 )].

As the blockchain grows to become more popular, the use cases in financial institutes have increased from less complex areas such as consumer-facing products, and business service products, to higher complexity and much more valuable areas such as back-end process integration. However, in order to generalize the wide range of use cases, there are mainly three well-documented and dynamic subsectors, within which use cases are being tested and have concluded (or are in the process of concluding) a proof of market, including in the context of emerging markets [ Lewis et al. ( 2017 )].

Commercial finance: In the commercial financing realm, transactions of goods and services require end-to-end transparency. Blockchain technology simplifies the use of different and incompatible systems by suppliers by displaying transactions to all users in a distributed ledger. Blockchain is able to provide the visibility of the order-to-delivery pipeline, provide a reduction in the number of discrepancies as well as provide efficiency in the time required to resolve discrepancies [ Laurence ( 2019 )].

Trade finance: Trade finance businesses require a way of streamlining the process of earning approvals from multiple legal entities involved such as customs, port authorities, transportation companies, etc. Blockchain technology in trading can be used by legal entities involved to sign approvals, communicate statuses with each other as well as update payment information. Blockchain can provide the solution of condensing complicated processes into a single process where all parties are able to access a shared ledger. The time required to access funds is reduced since long settlement times and error dispute times are eliminated in the blockchain system. Increased trust and accountability are established among each company, regulators, and consumers in this process [ Laurence ( 2019 )].

Cross-border transactions: In order to manage nostro and vostro accounts, where nostro accounts are domestic and vostro accounts are foreign accounts, banks require a simplified method of facilitating these foreign exchange transactions through reconciliations. Accounts can become stored accounts as a transaction on a blockchain, which is able to produce improved efficiency and transparency through automated reconciliation of all accounts. All transactions across the banks can be therefore maintained through a single interface, providing improved visibility of transaction status, currency balance, and process health as well as in a consistent and timely manner [ Laurence ( 2019 )].

4.1. Benefits of blockchain in financial services

The blockchain properties are particularly well suited to maximizing and boosting the mutual benefits and optimizing the business risks related to co-investment and collaboration. Blockchain herein allows banks to work jointly on a common platform using a decentralized and distributed database. For one major bank, various advantages of blockchain technology, including, but not limited to, immutability and irreversibility, are useful but indeed the core tenet is the idea of decentralized information that enables different competitors and countries to collaboratively co-invest in a common solution (platform). Moreover, all participants here can maintain their own data and only allows specific data to each other when they want to trade or interact [ Patel and Li ( 2020 )].

Money transfers: Blockchain removes the challenge of transferring money internationally for customers and financial institutions by introducing electronic money transfers which can be done through mobile devices, avoiding the extensive process of visiting a money transfer facility, standing in line, and/or paying fees for a transaction. Blockchain not only saves time but also reduces costs or fees for the transmission of payments [ Knezevic ( 2018 ); Ozili ( 2018 )].

Inexpensive and direct payments: In order to execute the transfer of funds, there is always a third party involved which normally adds an extra layer of complexity and fees. The blockchain process eliminates the third party and can entirely exclude the layer of fees and complexities that come with it. Blockchain also tackles the insufficient funding problem in which, due to the nature of blockchain, accounts that lack funds are unable to issue payments. In contrast, traditionally, it was possible with checks. Blockchain-based payments give merchants the confidence of knowing that the transaction is good within a few seconds or minutes. Scams are also avoided by using blockchain-based payments, as they are quick and reversible. They are also less expensive than using banking services, especially for pricey items. Furthermore, it is worth noting that the safest methods of payment are wire transfers, cash, and cashier checks. However, cash is considered untraceable, whereas wire transfers are time-consuming, and cashier checks may be feasibly forged. With blockchain-enabled payments, these challenges are resolved for greater confidence [ Fanning and Centers ( 2016 )].

Transaction details: The distributed ledger helps track ownership or blocks/transactions and can be used for verification of all information leading back to the first block. Smart contracts are also able to track when a buyer pays and when the seller delivers along with identifying any problems that may arise during the process. This automation would reduce human work for registering and monitoring transactional details as well as human error.

Financial inclusion: Start-up institutions have a great opportunity for competing with major banks due to blockchain’s low costs and minimum balance requirements. Customers can register with alternative banks for lower banking requirements, as well as take advantage of the use of digital identification in mobile devices that blockchain provides to free customers from the hassle of traditional banking.

Reduced fraud: The blockchain ledger makes sure that all parties in a network receive a copy of the transactions to help maintain integrity along with the unique block hash. The unique hash in a block makes the blockchain robust against denial-of-service (DoS) and distributed denial-of-service (DDoS) attacks, hackers, and other fraud types. With the threat of cyber risks and vulnerabilities being reduced or even eliminated, the cost of conducting business is minimized, enabling all the involved parties to save stress and money.

Cryptocurrency: Digital cryptocurrencies is a blockchain-based technology that comprises the new wave of assets relying on blockchain technology. Although digital currencies are already in use, blockchain-supported companies are reducing the entry barrier while offering a seamless exchange of the widely used (most popular) digital cryptocurrencies as a banking alternative [ Knezevic ( 2018 )].

4.2. Challenges in blockchain-enabled financial services

4.2.1. regulatory issues and governance.

There is a lack of regulatory clarity in the blockchain. Dispute resolution mechanism, regulatory agencies and their coordination mechanism, the legal standing of documents/instruments stored on the blockchain liability ownerships (of smart contract failure, etc.), definitions, territorial requirements, and regulatory reporting are all key aspects upon which financial institutions need much more clarity on. Even where limited blockchain rules exist like New York’s mandate for cryptocurrency license, these are fragmented/incomplete or prohibitively expensive [ Chang et al. ( 2020 )]. The lack of a common and transparent governance structure for blockchain puts decision-making primarily to market dynamics. This creates a risk of network and infrastructure failure, and broader financial system instability.

4.2.2. Privacy and security

Distributed Ledgers by design are available to all users of a blockchain network therefore, in a permissionless ledger, counterparties may be capable of exploring transaction history including those transactions that they are not a part of. Tracking information of users and their wallets is made easy since their relationship with the cryptocurrency pseudonymous is not fully anonymous. There is also a possibility that smart contracts accessing transaction data may leak data regarding the content being processed [ Chang et al. ( 2020 )]. Financial institutes have commercial terms which are stored in smart contacts which can be at high risk and vulnerable to confidentiality breaches. In regards to security, blockchain systems lack concrete anti-fraud, KYC (Know Your Customer) and Anti-Money Laundering (AML) tools (i.e. KYC is a process by which banks retrieve data about the address and identity of purchasers, whereas AML is a set of rules, regulations, and processes to prevent money laundering, terrorism funding, and other financial crimes). For example, while it could be feasible to identify the owner’s address that is being used in money laundering, it is impossible to block such a transaction in advance. There could be further risks or even machines can be hacked for fraudulent and malicious transactions, weak (highly vulnerable) key generation problems, hacked key problems, DDoS, consensus hijack, as well as double-spending attack problem which arises as blockchain’s security implications [ Martin et al. ( 2022 )].

4.2.3. Behavioral and counterparty risks

With the differences of interests among financial institutes, there could be a risk of lack of cooperation and/or collaboration among regulators, banks, clearing services, stakeholders, trading firms, exchanges, trade bodies, clearing and settlement services, etc. [ Upadhyay et al. ( 2021 )]. In addition, there also exists the risk of private-based distributed ledgers which may lead to collisions and cartelizations with algorithms being leveraged and implemented in a manner that may produce anti-competitive results. If a private blockchain is designated as the default network, risks related to competition can materialize if it gets dominated by major players. Furthermore, if there are high barriers to entering the private blockchain, smaller providers may not be able to afford it and therefore be at a disadvantage. With blockchain still gaining trust amongst players in the game, there lacks sufficient trust in this ecosystem, increasing the possibility of counterparty and systemic risks. For example, smart contracts with third parties outside of the network create counterparty risks, with very limited and/or restrained institutional support to assist the parties to obtain their rightful settlements.

4.2.4. Settlement risks

Finalizing a settlement is considered a legal requirement in settlement and post-trade clearing. However, due to the nature of public blockchains, legal liabilities can be ambiguous and/or challenging to assign [ Chang et al. ( 2020 )]. This increases the risk of adversely impacting the balance sheets of participants and also their creditors in addition to customer rights [ Chang et al. ( 2020 )]. As such, risks of insolvency of one participant undoing the transactions that are actually settled are possible in the financial realm if settlement finality is not guaranteed.

5. Blockchain and Market Status

As networks enabled in financial services are becoming more decentralized and ad hoc , they are prone to attacks and vulnerabilities. In order to sustain the attacks and maintain their status quo in the market, blockchain has been used as an effective solution to prevent and avoid them. In this section, we review the current involvement and impact of blockchain technology in the financial market per status, namely, primary, secondary, and clearinghouse markets.

5.1. Primary market status

Like other blockchain-enabled financial markets and systems (e.g. clearinghouse, secondary market), the primary market also aims at addressing blockchain technology-related challenges, including data security/integrity, transaction scalability, and trust, and liquidity [ Xu et al. ( 2019 )].

Nowadays, the integration of blockchain technology in applications related to the securities industry mainly addresses the private equity (PE) and digital securities issuance fields. Nasdaq, an early online global marketplace for buying and trading securities (launched in 2014), is a vital example of integrating blockchain technology into an exchange system [ Miraz and Donald ( 2018 )]. Another example is the online retailer O v e r s t o c k . c o m which developed an issuance application for the company’s newly listed blockchain-based stock, which was approved by the U.S. Securities and Exchange Commission (SEC). These initial technological advancements led to the issuance and approval of the world’s first bond developed and handled through blockchain technology (i.e. the ‘Bondi’ bond) [ Pana and Gangal ( 2021 )].

The integration of blockchain technology into the primary market addresses many of its residing challenges and issues. Challenges include (1) the need for a reliable and robust data management system, (2) low/limited liquidity level, and (3) limited application derivatives [ Liu et al. ( 2021a )]. Although the incorporation of blockchain technology in the primary market is still insignificant, there are several remarkable works addressing this industry trend.

Furthermore, access-granted users are authorized to retrieve the data stored in the blockchain while preserving data consistency and transparency. Such an aspect significantly reduces the costs associated with due diligence (DD) and helps avoid potential errors that may occur in the data copying process. Düdder and Ross [ 2017 ] have further tackled the DD data and demonstrated that it is on-chain, consistent, and transparent, which thus minimizes the data asymmetry and the risk of fraudulent activities.

Halevi et al. [ 2019 ] showed that switching from third parties of securitization by blockchain technology enables efficient tracing of the process details, enhances the securities issuance task (e.g. speeds up the issuance), and transaction transparency. These substantial improvements will potentially lead to a liquidity increase. Mills et al. [ 2016 ] also investigated the potentiality of blockchain technology to minimize fraudulent activities risk due to data asymmetry. Here, tamper-proof and information verification mechanisms can be leveraged to address collusion and trust issues in the financial services market.

Other studies such as the one conducted by Benhamouda et al. [ 2019 ] have addressed the security issue by implementing extensible secure multiparty computation capabilities to the permissioned blockchain technology (using Hyperledger Fabric). Their proposal also implemented a clearing price mechanism for initial public offering (IPO) services.

There are several challenges related to the traditional financial market (Table  2 ), including trading and issuance of the securities market. These challenges range from data asymmetry to trust and system efficiency. Although the deployment of blockchain technology in the primary market can address many of these challenges, transaction scalability (transaction processing) is a key concern in the blockchain itself, which does not fulfill the financial industry’s needs (e.g. large-scale trading and issuance of securities market). Several proposals aimed at enhancing the scalability of blockchain technology by using sharding [ Wang et al. ( 2019b )], off-chain computing [ Mühlberger et al. ( 2020 )], scalable consensus mechanism [ Luu et al. ( 2015 )], or optimization approaches [ Wu et al. ( 2020 )].

Challenges in the financial market addressed by the incorporation of blockchain.

DiscoveryMismatch, data privacy/sharingPermissioned blockchain
High costValidation process, data privacy/sharing, DD costPoW, DAO, tamper-proof
TrustData privacy/sharing, DD cost, contracts executionDAO, tamper-proof, smart contracts
Low volumeTransaction volumeHigh scalability blockchains
Asymmetric informationConfidentiality, data securityMulti-signature
Low efficiencyContracts execution, mismatch, DD cost, data privacy/sharing, validation process, trading processPermissioned blockchain, smart contracts, tamper-proof, DAO, PoW

5.2. Secondary market status

The incorporation of blockchain technology and the secondary market is an important research trend for academia and the financial industry. Some notable studies, such as Tsai et al. [ 2020 ] have investigated and explored the integration of blockchain technology along with the Ethereum platform for secondary market-based exchanges. Such integration can address some of the vital challenges related to the conventional system of exchange (e.g. centralization, transparency, transaction processing fees, etc.)

The secondary market typically addresses public offerings, where previously issued financial instruments, including bonds and stocks are bought, sold, or exchanged. One of the prominent applications of the secondary market is the exchange center, in which blockchain technology is remarkably involved [ Karim et al. ( 2022 )]. It is worth noting that the applications systems that are officially announced to date focus on the trading and issuance of over-the-counter/public equity market securities and the on-exchange market (i.e. post-trading applications). Among early blockchain-based systems for the secondary market, services is the trading system for London Securities Exchange (LSE) developed by IBM [ Miraz and Donald ( 2018 )] and the Australian Securities Exchange (ASX) for financial market services facilitation [ Dunkley ( 2018 ); Pop et al. ( 2018 )].

While several financial services companies, such as Deutsche KfW Financial Institutions, are still performing simulations for blockchain-enabled securities trading, others have fully integrated blockchain technology into secondary market services. A good example is the Nasdaq Linq [ Nair and Bhagat ( 2020 )], a public equity trading solution developed by Nasdaq in collaboration with the blockchain start-up [ Miraz and Donald ( 2018 )]. This platform enables non-listed users to transfer their equity and perform a public equity transaction settlement. These efforts will pave the way for more companies/organizations to adopt blockchain technology in their financial services (e.g. post-trading, clearing, etc.)

5.3. Clearinghouse market status

The incorporation of blockchain technology and clearinghouse has recently evolved as a hot trend in the financial industry, resulting in various applications and use cases. Recent studies have investigated services and applications associated with the clearinghouse, including inter-bank transactions, clearing, and settlement. Furthermore, the clearinghouse is nowadays considered a vital application of blockchain technology adoption in the financial sector, resulting in the development of many blockchain-based clearinghouses [ Casino et al. ( 2019 )].

There are several limitations in the traditional clearinghouse systems, including, but not limited to, the complexity of workflows, information redundancy, lack of information certifiability, high data asymmetry, and low efficiency in information retrieval [ Bagrecha et al. ( 2020 )]. The incorporation of blockchain technology in the clearinghouse market resolves its conventional limitations by enabling settlement transactions regardless of the trust level among participating entities [ Hughes et al. ( 2019 )]. The use of blockchain technology here can further enhance the system’s clearing speed and secure the exchange of information and updates between banks and clearinghouses.

Moreover, to address the complexity of the settlement and clearinghouse operational process, a mobile-based clearing solution can be used to handle mobile financial services based on a predefined set of rules via smart contract [ Mvula ( 2020 )]. The solution also enforces information confidentiality and authentication. Last, future exchange trading solutions are recommended to alleviate the challenges related to the high cost and low efficiency in transactions of inter-banking. These solutions may leverage blockchain technology features and credit-matching frameworks (e.g. X-Swap).

6. Adoption Model for Blockchain Technology in Global Banking

In the past, many technology companies started developing blockchain for the financial service space. Some of them include BitPaogs, BTCJam, BlockCypher, Coinbase, Bifubao, Kraken, Digital Tangible Trust, BitPay, HelloBlock, and Ripple Labs. Established technology institutes such as R3, IBM, ConsenSys, and Chain, have started playing a crucial role in the blockchain ecosystem in the global markets which naturally sets the need for regulators and policymakers of financial services to start developing adoption mechanisms for blockchain. A proposal for such an adoption method would help with characterizing and distinguishing the variables influencing the organizations’ adoption behavior to accept and deploy the new and emerging technology innovations [ Kawasmi et al. ( 2020 )].

Given that the financial services industry is a highly regulated sector, the blockchain adoption rate typically depends on the way implementations are being supported by regulatory entities across the globe. A few regulations connected to blockchain are already in force. For example, the U.S. state of Delaware has officially signed a bill recognizing blockchain-based stock trading. Moreover, the Australian Securities and Investment Commission regulatory framework requires the financial services institutions that deploy the distributed ledger platforms to establish proper and efficient risk management systems and infrastructure in order for them to operate. Additionally, Commodity Futures Trading Commission, which is a U.S. regulator has also established a system to evaluate how blockchain technology is being deployed in the derivatives market [ Ganne ( 2018 )].

By being properly guided in an industry of high-risk requirements and compliance [ Chang et al. ( 2020 )], adoption models are meant to assist in coping with and vanquishing the obstacles currently preventing blockchain technology’s adoption and successful integration in the global banking industry [ Kawasmi et al. ( 2020 )].

6.1. Adoption governance commissions and structures

The European Commission (EC) is a regulatory/policy maker of blockchain which is a task force created and entrusted with establishing and developing blockchain-enabled technologies expertise [ Chang et al. ( 2020 )]. The EC in 2016 aimed at bringing exchange platforms and providers of the virtual currency custodian wallet within the Fourth Anti-Money Laundering Directive (4AMLD) scope. The EC proposes to support a “gold standard” for blockchain technology by deploying European policies in a regulatory framework.

This gold standard for blockchain comprises the following items [ Chang et al. ( 2020 )]:

Environmental sustainability: Fulfilling sustainability and energy-efficiency demands.

Data protection: Ensuring compatibility with Europe’s regulations of privacy and strong data protection level.

e-Identity: Ensuring compatibility with regulations of the e-signature, such as electronic IDentification, Authentication and trust Services (eIDAS: regulations of trust services and electronic identification for internal market electronic transactions), and supporting a pragmatic, sensible, decentralized, and self-sovereign identity (SSI).

Cybersecurity: Ensuring reliable and high cybersecurity levels.

Interoperability: Supporting high interoperability with external legacy systems.

The elements of EC’S blockchain strategy support their objectives, the most distinctive ones being: having built a pan-European public services blockchain, promoting legal certainty, increasing funding for research and innovation, promoting blockchain for sustainability, supporting interoperability and standards, supporting blockchain skills development, and finally having a continual feedback loop within the community itself.

By building blockchain infrastructure for the public sector and private, the European public sector creates a vital role in the blockchain ecosystem. It promotes legal certainty by developing a pro-innovation legal framework, which protects consumers and provides security for businesses. The EC has recently published a regulating crypto assets proposal. The proposal aims to create a pan-European regulatory sandbox to enhance innovative blockchain solutions and update the regulations for crypto assets related to AML [ Knezevic ( 2018 )]. Furthermore, the EC supports funding for blockchain innovation through research grants and investments targeting AI & Blockchain startups and early-stage ventures, promoting the reduction of educational gaps and bringing in more innovative knowledge to further maintain governance. EC enables interoperability as engaging with relevant bodies is critical and substantial in the ecosystem, and interrelates with the blockchain community, academia, and private sectors through two main bodies:

The International Association of Trusted Blockchain Applications (INATBA): It is a private/public partnership established to bring the private sector and other stakeholders together with the European member states to further the blockchain ecosystem. It promotes the integration of blockchain technologies and good governance and acts as a guidebook for governments and international bodies to abide by Knezevic [ 2018 ].

The European Blockchain Observatory and Forum (EU Blockchain Observatory and Forum) : It is regarded as a European Parliament designed to establish expertise for the monitoring and identification of blockchain trends and initiatives globally to develop a publicly available and comprehensive source of blockchain knowledge, in support of the blockchain ecosystem within the EU [ Knezevic ( 2018 )].

Financial Conduct Authority (FCA): It monitors blockchain developments and research on how distributed ledger technology (DLT) can assist in regulatory compliance. In the UK, FCA provided approval to a limited number of firms for using the technology of blockchain; Nine blockchain-supported firms in November 2016 received sign-off to be governed within their regulation policies.

6.2. A robust banking and lending platform

A robust blockchain-based banking and lending framework is depicted in Fig.  3 . This framework is a holistic overview of an approach that financial service organizations, such as banks and credit unions, can use to evaluate blockchain in the context of their operations. Each entity needs to assess the technology, considering its policies and procedures, to better understand the organizational benefits and challenges of a blockchain-based banking lending platform. The basis of this framework revolves around five pillars described next.

Fig. 3.

Fig. 3. A robust blockchain-based lending framework.

6.2.1. Superior client experience

Over the last several years, technological evolution has prompted financial services organizations to enhance the client experience. It is important to remember that clients play a critical role in the financial services ecosystem. When working through new implementations, the client relationship needs to take the front stage and should result in substantial benefits to the clientele. Researchers have proclaimed that blockchain can help lower the costs of providing banking products and services [ Kumari and Devi ( 2022 ); Schuetz and Venkatesh ( 2020 )]. The reaped benefits from those implementations can be shared with clients in the form of lower fees. In turn, blockchain can be the catalyst to assist financial services organizations in providing their clients with cost-effective products and services.

It is no secret that some banking institutions have manual and outdated lending workflows. These outdated processes could be highly frustrating to clients as they may lack sophistication or be too archaic to update. The workflows could be enhanced by implementing some automation. For example, the Ethereum blockchain supports the implementation of smart contracts, which allows for a great deal of automation. Another essential component of the client experience is protecting the client’s sensitive information. As such, a blockchain implementation must follow privacy policies to provide an enhanced client experience.

6.2.2. Regulatory benefits

By design, blockchain was developed to operate by untrusted nodes. When a new node is added to the blockchain, all blocks, from the very beginning to the most current, are validated by each node. Since inception, this validation process can only be completed because the blockchain stores its own history, including an entire trail. While this functionality seems redundant and labor-intensive, particularly as the chain continues to grow, it creates a vital documented trail. This type of built-in functionality is of particular interest to financial regulators. While there is uncertainty about the regulatory compliance for blockchain, the trail of historical activity can bring some level of comfort to regulators

Immutability features are another essential component of blockchain, particularly for the public ones. This built-in feature allows permanent recording of activity to the blockchain [ Moyce ( 2016 )]. As soon as data is written to the blockchain, it is nearly impossible to modify. A change requires significant effort and energy, making it impractical to be successfully executed. Furthermore, a minor change in the blockchain will cause the hash values, from that point forward, for the activity that has already been recorded to be invalid.

KYC establishes a process to validate the true identity of customers opening an account at a financial services organization. In the case of blockchain implementation, using the technology to record client identity information could transform the process banks use to onboard new clients. This process could significantly enhance the account setup steps and result in loans being granted much faster [ Ostern and Riedel ( 2021 )].

6.2.3. Improved security

A vital design function of blockchain is the configuration of a distributed network. This P2P setup allows for numerous data security benefits. Each peer in the network, specifically each full node, stores and maintains its own copy of the entire blockchain. As such, the peers can independently validate the data in the blockchain. This is particularly important when new nodes join the network. One of their duties is to obtain a copy of the blockchain and validate all the records. Performing this task at the onset will ensure they have obtained a valid copy of the blockchain. An additional aspect of the P2P network configuration is that it allows for data redundancy as each node stores a copy of the data set. In the case of a lending platform, this is of utmost importance as it helps prevent a catastrophic data loss, which can have significant negative implications for a business, particularly for banking institutions [ Hassani et al. ( 2018 )].

Banking institutions are susceptible to DoS attacks. These attacks can create significant reputational and regulatory compliance risks for a banking entity [ Ahmad et al. ( 2021 ); Padmaavathy ( 2019 )]. The scale of the attack can land a bank inoperable for an extended number of hours and can even take entire systems offline. In such a case, the damage could affect both internal and client-facing systems. The P2P network configuration can be leveraged to minimize the risks associated with such an attack. In effect, the distributed network configuration serves multiple essential functions.

6.2.4. Enhanced auditing

Organizations that have not adopted effective auditing policies are likely more exposed to attacks than those which update their policies and procedures frequently. This is an area of primary concern with entities that handle confidential or sensitive information as part of their regular course of business. Blockchain technology has built-in functionalities to mitigate such data attacks [ Dashkevich et al. ( 2020 ); Garg et al. ( 2021 )].

Blockchain maintains a record of all transactions that have been created since inception. In essence, this record provides a complete trail of the activity that has taken place in the blockchain. As part of the validation process, when a new node joins the network, it audits and confirms the blockchain activity. This level of transparency is essential for both internal and external auditors within a banking institution [ Smith and Castonguay ( 2020 )]. It further helps boost the trust level of data and enhances the auditing process.

6.2.5. Human capital and smart contracts

One of the great benefits of technological advances is that they allow the financial service industry to allocate more time to interesting and efficient service-related functions rather than mastering repetitive tasks. While this may sound like a ‘cliché,’ the truth of the matter is that blockchain can enable the use of smart contracts [ Buterin et al. ( 2014 ); Ali et al. ( 2019 ); Taherdoost ( 2023 )] for automatic execution of various banking services in a decentralized network.

In the banking world, smart contracts can be highly useful tools. This type of automation is considered the next level of sophistication as it relates to blockchain and cryptocurrency. Properly leveraged in a banking blockchain-based lending solution, the technology can be thought of as an intelligent robot performing repetitive tasks on behalf of the employee. While those tasks could be redundant, they are nonetheless important in the context of a lending ecosystem; for example, consider monthly loan payments. Under normal circumstances, loan payments are scheduled to occur on a consistent basis. However, missing a loan payment could have substantial negative implications for a borrower or the financial institution. Concurrently, another example to consider is the reporting of loan data to the credit bureaus, which itself is being researched for a blockchain implementation [ Hassija et al. ( 2020 )]. These are repetitive tasks that could be delegated to smart contracts.

7. Vision for Blockchain Future in Financial Services

7.1. practical implications.

Many technological advances brought forth by blockchain technology could potentially impact a wide array of industries. However, there are several important practical implications that financial services organizations need to consider before deploying blockchain.

One crucial factor to consider when deploying blockchain is the human investment factor. Employees may need to be trained. Given that blockchain is a relatively new technology and may continue to develop quickly, continuous training may be required. That is an initial investment in employees that may not yield initial results. Furthermore, organizations may need to hire outside expertise to ensure their implementations meet all audit, internal, and regulatory expectations as part of the initial deployment. This phase becomes ever more pressing when the organization has had limited exposure to such technology.

The financial services industry understands that the data it manages is very valuable to bad actors, yielding many benefits and financial motivations [ Hassija et al. ( 2021 )]. While organizations deploy significant resources to ensure their systems’ security, the deployment of new technology comes with risk. As such, financial organizations need to perform a higher level of due diligence and need to continuously evaluate the blockchain-based smart contracts deployed for any potential vulnerabilities (e.g. code bugs). Further, an area of increasing concern for blockchain researchers is privacy. While privacy is an ever-expanding aspect of banking, researchers continue to investigate ways to ensure blockchain meets the regulatory demands [ Bernabe et al. ( 2019 ); Treiblmaier et al. ( 2020 )]. There are global implications with privacy, and successfully using blockchain also implies that privacy needs must be accommodated.

7.2. Opportunity in trade finance

Most banks have identified trade finance as the area in which blockchain is expected to make a significant impact within the next few years [ Patel and Li ( 2020 )]. Many use cases in which bank consortia have established and developed capabilities in this area, including We.Trade, a blockchain platform implemented by nine banks (Deutsche Bank, Nordea, Rabobank, HSBC, Santander, Natixis, Société Générale, KBC, and UniCredit) [ Patel and Li ( 2020 )]. This platform was developed to support cross-border trade automation.

The feasibility of using blockchain in trade finances enhances financial transactions by payments through a letter of credit. Further, it helps to integrate the procedures involved in trade finance with logistics tracking through blockchain. This could potentially address the trade-related challenges in insurance, logistics, customs clearance, and automation in other trustless scenarios. However, the core enabling features of blockchain technology could still be enhanced through gathering valuable data and analyzing and utilizing them for bank endorsement, letters of credit, insurance, and other trade finance processes.

7.3. Security issuance

Primary issuance and payment of cash flows are currently largely tracked and executed on a manual basis which can be transformed by blockchain systems to facilitate procedures via pre-determined smart contracts. With the immutable nature of this technology, blockchain transactions can, for instance, issue bond proceeds on a parametric basis that is instantaneously activated once specific trigger conditions are fulfilled.

A paradigm shift in the establishment of trust and bonds in the relation between the investors and issuers could be marked through the blockchain for imparting security insurance. The complete lifecycle of blockchain assists in managing private and public security issuance and the complete digitization of physical documents through smart securities. Other potential benefits of blockchain-enabled security issuance include a less intermediate, easy collection of data, quick clearance, and cost cuts in brokerage and sales. However, the legal opinion given through blockchain-based security issuance needs sustainable support from lawmakers for ripping their core benefits and support.

7.4. Asset tokenization

Blockchain enables an ecosystem for regulated digital shares of any assets (i.e. within any asset class) to be issued and traded on the open market by a legal entity or individual. The tokenization of assets will benefit banks by lowering global trade costs. A tokenized economy, therefore, provides a highly efficient platform where frictions are eliminated during the generation, buying, and selling of tokens [ Patel and Li ( 2020 )]. Additionally, tokenization can make the financial industry and services even cheaper, easier, more accessible, and faster, thus unlocking trillions of dollars in currently illiquid assets, and massively augmenting the trade volumes [ Patel and Li ( 2020 )].

By tokenization of assets through blockchain, large disruption in the business transactions in industries enables them to trade, sell and buy digital assets [ Konstantinidis et al. ( 2018 )]. Such trading of digital tokens makes financial systems faster, transparent, and universally accessible. However, in spite of the potential growth of blockchain, the conversion process of real-world assets to digital tokens is still in its infancy. For its widespread adoption, the challenges and obstacles associated with this technology need to be addressed with trustworthy robust blockchain features.

7.5. Clearing and settlement via DLT

A shared distributed ledger system will expedite the clearing and settlement of assets where large multi-party transactions occur. Stock exchanges and other financial institutions that handle large securities exchange amounts have experimented in their settlement processes with blockchain platforms. Notably, Goldman Sachs in 2017 was granted a patent for SETLcoin, which is a transaction-supported settlement system using blockchain technology [ Patel and Li ( 2020 )]. According to one respondent, the industry groups are incorporating precursor steps towards continuous 24-h settlement, otherwise meaning, to establish a genuine global settlement day leading to a full-blown continuous payment-versus-payment (PvP) and delivery-versus-payment settlement globally [ Patel and Li ( 2020 )].

For digital property transactions, their account balance management through decentralized platforms supported by DLT can eliminate the need for centralized control registers. It is noteworthy that the impact of DLT in cryptocurrency trading, such as Bitcoins, is overwhelming with permissioned, and shared ledgers through private or public networks. However, the operational and technological challenges in DLT are still under legal threats in the financial industries expecting concrete regulatory principles. Furthermore, the risks involved in asset management without a central authority and the transparency levels in the transactions need assistance through blockchain technology.

7.6. KYC and identify

As each participant possesses a unique digital identity in a blockchain network, the authentication processes can be automated across a shared KYC infrastructure. Blockchain brings greater efficiency and transparency and prevents the funding of illegal and fraudulent activities, illicit flows of funds, and AML [ Patel and Li ( 2020 )].

The privacy-oriented decentralized architecture implemented through blockchain enables KYC through smart contracts in banking and other legal processes. It helps to register the customer identity and safeguard them from the risks of assessing the records by illegal members with illegitimate intentions of foul playing in the records. However, the series of fundamental issues in imparting e-KYC through blockchain needs attention and could assist financial sectors in identifying and stopping fraudulent actions.

7.7. Dominant institutions and blockchain production leadership

Institutes would (will) drive significant blockchain production over the next two to three years [ Patel and Li ( 2020 )]. In order to fit conditional use cases, financial companies will produce their own blockchain ecosystem, then eventually expand moving money cross-border, bringing suppliers and buyers onto their chain [ Patel and Li ( 2020 ); Yoo ( 2017 )].

The potential impact of blockchain in the realization and development of cyber-physical production systems helps identify the complexity in manufacturing systems and helps to adapt to the cyber computing ecosystem. Such blockchain-based distributed networks of industrial production systems are considered a backbone for cyber-physical production systems. However, a unified blockchain architecture is in demand for enabling machine-to-machine (M2M) communication and smart contracts in the production space.

7.8. Success-driven wider adoption

Once a single use case is successful, the adoption or integration of others can be likely driven across the industrial sector. It is worth noting that as more industrial organizations perceive what the key components are around mutability and consensus for financial service, then there will be many more additional services that can be adopted or leveraged [ Patel and Li ( 2020 )]. Consequently, as adoption increases, the growing technology can further assist with resolving the current challenges and limitations in cross-platform interoperability.

New financial service models need blockchain integration/upgrade for improved and efficient financial services and operations. With the customer-centric demands, it could assist in identifying credit information, restructuring the financial market, and enhancing payments across borders. The status quo of the economy and financial market will gain success, which truly depends on the widespread adoption of blockchain with constructive suggestions from finance and technological experts.

Last, although the integration of blockchain in the financial services market is dramatically evolving, the current development remains slow in practice. This is primarily due to the regulatory restrictions and lack of regulatory standards [ Zhu and Zhou ( 2016 )]. Given the current recognition of the technological advancements of blockchain technology in decentralized (distributed) systems and services, many regulatory restrictions are expected to be released in the near future.

8. Conclusion

Bitcoin and its alternative cryptocurrencies have been impacting financial services for nearly a decade. It is expected that blockchain technology will soon have the largest impact on financial services and the industry in general. Such technology will likely change, at the minimum, the manner financial firms conduct many of their financial activities, in addition to product validation, gambling, auditing, and contracts. Besides, some of the current long-standing professions and businesses will cease to exist due to structural transformations created by firms deploying blockchain technology. As blockchain matures, it increases value in return on investment and provides many benefits as well as potential challenges during its implementation phases. Hence, institutes must continue to take a strict approach to regulations and policies for blockchain adoptions in financial services.

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Anisha Miah is Experienced Information Technology Consultant with a demonstrated history of working in the information technology and services industry. She is currently pursuing a Master's degree focused in Cyber/Computer Forensics and Counterterrorism from Fordham University Graduate School of Arts and Sciences, NY USA.

Mohamed Rahouti received the M.S. degree in Mathematics & Statistics and the Ph.D. degree in Electrical Engineering from the University of South Florida, Tampa, FL, USA, in 2016 and 2020, respectively. He is currently an Assistant Professor at the Department of Computer and Information Sciences in Fordham University, Bronx, NY, USA. His current research focuses on computer networking and security, blockchain technology, Internet of Things (IoT), machine learning, and network security with applications to smart cities.

Senthil Kumar Jagatheesaperumal received his B.E. degree in Electronics and Communication Engineering from Madurai Kamaraj University, Tamilnadu, India in 2003. He received his Post Graduation degree in Communication Systems from Anna University, Chennai, in 2005. He has pursued Ph.D. in Embedded Control Systems and Robotics from Anna University, Chennai in 2017. He has 14 years of teaching experience and currently working as an Associate Professor in the Department of Electronics and Communication Engineering, Mepco Schlenk Engineering College, Sivakasi, Tamilnadu. He received two funded research projects from National Instruments, USA each worth USD 50,000 during the years 2015 and 2016. He also received another funded research project from IITM-RUTAG during 2017 worth Rs.3.97 Lakhs. His area of research includes Robotics, Internet of Things, Embedded Systems and Wireless Communication. During his 14 years of teaching, he has published 20 papers in International Journals and more than 25 papers in conferences. He is a Life Member of IETE and ISTE.

Mousa Ayyash received his B.S., M.S. and Ph.D. degrees in Electrical and Computer Engineering. He is currently a Professor at the Department of Computing, Information, and Mathematical Sciences and Technology, Chicago State University, Chicago. He is the Director of the Center of Information and Security Education and Research (CINSER). His current research interests span digital and data communication areas, wireless networking, visible light communications, network security, Internet of Things, and interference mitigation. Dr. Ayyash is a member of the IEEE Computer and Communications Societies and a member of the Association for Computing Machinery. He is a recipient of the 2018 Best Survey Paper Award from IEEE Communications Society.

Kaiqi Xiong received the Ph.D. degree in computer science from the North Carolina State University. Before returning to academia, he was with IT industry for several years. He is currently a Professor in the Intelligent Computer Networking and Security Laboratory at the University of South Florida, affiliated with the Florida Center for Cybersecurity, the Department of Mathematics and Statistics, and the Department of Electrical Engineering. His research was supported by the National Science Foundation (NSF), NSF/BBN, the Air Force Research Laboratory, Amazon AWS, the Florida Center for Cybersecurity, and the Office of Naval Research. His research interests include security, networking, and data analytics, with applications such as cyber-physical systems, cloud computing, sensor networks, and the Internet of Things. He received the Best Demo Award at the 22nd GENI Engineering Conference and the U.S. Ignite Application Summit with his team in 2015. He also received the best paper award at several conferences.

Fredery Fernandez is Experienced Information Technology Professional with a demonstrated history of working in the information technology and services industry. He received a Master's degree in Cybersecurity from Fordham University Graduate School of Arts and Sciences, NY USA.

Modupe Lekena received a Master's degree in Cybersecurity from Fordham University Graduate School of Arts and Sciences, NY USA. He is an Experienced Software Engineer who develops software to deliver solutions to a world that is beyond the emerging technology waves.


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Received 31 October 2022 Revised 12 May 2023 Accepted 20 June 2023 Published: 15 August 2023

Blockchain in Financial Services

Fintech: Law and Regulation (Jelena Madir, ed., Edward Elgar, 2019)

24 Pages Posted: 12 May 2020

Colleen Baker

University of Oklahoma - Michael F. Price College of Business

Kevin Werbach

University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department

Date Written: 2019

The financial services industry is among the areas predicted to benefit the most from blockchain in the years to come. A key reason is that its ‘core functions of verifying and transferring financial information and assets very closely align with blockchain’s core transformative impact’ and it relies heavily ‘on multiple ledgers to maintain transactional information and balances.’ Blockchain’s promise for the industry lies in its potential to increase the efficiency of existing processes in the short term (dispensing with intermediaries and time-consuming administrative processes ), and to transform existing business models in the longer term.

Suggested Citation: Suggested Citation

Colleen M. Baker

University of oklahoma - michael f. price college of business ( email ).

307 West Brooks Norman, OK 73019-4004 United States

Kevin Werbach (Contact Author)

University of pennsylvania, the wharton school, legal studies & business ethics department ( email ).

3730 Walnut Street Suite 600 Philadelphia, PA 19104-6365 United States 215-898-1222 (Phone)

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  • Published: 04 July 2019

A systematic review of blockchain

  • Min Xu   ORCID: 1 ,
  • Xingtong Chen 1 &
  • Gang Kou 1  

Financial Innovation volume  5 , Article number:  27 ( 2019 ) Cite this article

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Blockchain is considered by many to be a disruptive core technology. Although many researchers have realized the importance of blockchain, the research of blockchain is still in its infancy. Consequently, this study reviews the current academic research on blockchain, especially in the subject area of business and economics. Based on a systematic review of the literature retrieved from the Web of Science service, we explore the top-cited articles, most productive countries, and most common keywords. Additionally, we conduct a clustering analysis and identify the following five research themes: “economic benefit,” “blockchain technology,” “initial coin offerings,” “fintech revolution,” and “sharing economy.” Recommendations on future research directions and practical applications are also provided in this paper.


The concepts of bitcoin and blockchain were first proposed in 2008 by someone using the pseudonym Satoshi Nakamoto, who described how cryptology and an open distributed ledger can be combined into a digital currency application (Nakamoto 2008 ). At first, the extremely high volatility of bitcoin and the attitudes of many countries toward its complexity restrained its development somewhat, but the advantages of blockchain—which is bitcoin’s underlying technology—attracted increasing attention. Some of the advantages of blockchain include its distributed ledger, decentralization, information transparency, tamper-proof construction, and openness. The evolution of blockchain has been a progressive process. Blockchain is currently delimited to Blockchain 1.0, 2.0, and 3.0, based on their applications. We provide more details on the three generations of blockchain in the Appendix . The application of blockchain technology has extended from digital currency and into finance, and it has even gradually extended into health care, supply chain management, market monitoring, smart energy, and copyright protection (Engelhardt 2017 ; Hyvarinen et al. 2017 ; Kim and Laskowski 2018 ; O'Dair and Beaven 2017 ; Radanovic and Likic 2018 ; Savelyev 2018 ).

Blockchain technology has been studied by a wide variety of academic disciplines. For example, some researchers have studied the underlying technology of blockchain, such as distributed storage, peer-to-peer networking, cryptography, smart contracts, and consensus algorithms (Christidis and Devetsikiotis 2016 ; Cruz et al. 2018 ; Kraft 2016 ). Meanwhile, legal researchers are interested in the regulations and laws governing blockchain-related technology (Kiviat 2015 ; Paech 2017 ). As the old saying goes: scholars in different disciplines have many different analytical perspectives and “speak many different languages.” This paper focuses on analyzing and combing papers in the field of business and economics. We aim to identify the key nodes (e.g., the most influential articles and journals) in the related research and to find the main research themes of blockchain in our discipline. In addition, we hope to offer some recommendations for future research and provide some suggestions for businesses that wish to apply blockchain in practice.

This study will conduct a systematic and objective review that is based on data statistics and analysis. We first describe the overall number and discipline distribution of blockchain-related papers. A total of 756 journal articles were retrieved. Subsequently, we refined the subject area to business and economics, and were able to add 119 articles to our further analysis. We then explored the influential countries, journals, articles, and most common keywords. On the basis of a scientific literature analysis tool, we were able to identify five research themes on blockchain. We believe that this data-driven literature review will be able to more objectively present the status of this research.

The rest of this paper is organized as follows. In the next section, we provided an overview of the existing articles in all of the disciplines. We holistically describe the number of papers related to blockchain and discipline distribution of the literature. We then conduct a further analysis in the subject field of business and economics, where we analyze the countries, publications, highly cited papers, and so on. We also point out the main research themes of this paper, based on CiteSpace. This is followed by recommendations for promising research directions and practical applications. In the last section, we discuss the conclusions and limitations.

Overview of the current research

In our research, we first conducted a search on Web of Science Core Collection (WOS), including four online databases: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Arts & Humanities Citation Index (A&HCI), and Emerging Sources Citation Index (ESCI). We chose WOS because the papers in these databases can typically reflect scholarly attention towards blockchain. When searching the term “blockchain” as a topic, we found a total of 925 records in these databases. After filtering out the less representative record types, we reduced these papers to 756 articles that were then used for further analysis. We extracted the full bibliographic record of the articles that we identified from WOS, including information on the title, author, keywords, abstract, journal, year, and other publication information. These records were then exported to CiteSpace for subsequent analysis. CiteSpace is a scientific literature analysis tool that enables us to visualize trends and patterns in the scientific literature (Chen 2004 ). In this paper, CiteSpace is used to visually represent complex structures for statistical analysis and to conduct cluster analysis.

Table  1 shows the number of academic papers published per year. We have listed the number of all of the publications in WOS, the number of articles in all of the disciplines, and the number of articles in business and economics subjects. It should be noted that we retrieved the literature on March 25, 2019. Therefore, the number of articles in 2019 is relatively small. The number of papers has continued to grow in recent years, which suggests that there is a growing interest in blockchain. All of the extracted papers in WOS were published after 2015, which is seven years after blockchain and bitcoin was first described by Nakamoto. In these initial seven years, many papers were published online or indexed by other databases. However, we have not discussed these papers here. We only chose WOS, representative high-level literature databases. This is the most common way of doing a literature review (Ipek 2019 ).

In the 756 articles that we managed to retrieve, the three most common keywords besides blockchain are bitcoin, smart contract, and cryptocurrency, with the frequency of 113 times, 72 times, and 61 times, respectively. This shows that the majority of the literature mentions the core technology of blockchain and its most widely known application—bitcoin.

In WOS, each article is assigned to one or more subject categories. Therefore, we use CiteSpace to visualize what research areas are involved in current research on blockchain. Figure  1 shows a network of such subject categories. The most common category is Computer Science, which has the largest circle, followed by Engineering and Telecommunications. Business and Economics is also a common subject area for blockchain. Consequently, in the following session, we will conduct further analysis in this field.

figure 1

Disciplines in blockchain

Articles in business and economics

Given that the main objective of our research was to understand the research of blockchain in the area of economics and management, we conduct an in-depth analysis on the papers in this field. We refined the research area to Business and Economics, and we finally retrieved 119 articles from WOS. In this session, we analyzed their published journals, research topics, citations, and so on, to depict the research status of blockchain in the field of business and economics more comprehensively.

There are several review papers on blockchain. Each of these paper contains a summary of multiple research topics, instead of a single topic. We do not include these literature reviews in our paper. However, it is undeniable that these articles also play an important role on the study of blockchain. For instance, Wang et al. ( 2019 ) investigate the influence of blockchain on supply chain practices and policies. Zhao et al. ( 2016 ) suggest blockchain will widely adopted in finance and lead to many business innovations and research opportunities.

The United States, the United Kingdom, and Germany are the top three countries by the number of papers published on blockchain; the specific data are shown in Table  2 . The United States released more papers than the other countries and it produced more than one-third of the total articles. As of the time of data collection, China contributed 11 papers, ranking fourth. The 119 papers in total are drawn from 17 countries and regions. In contrast, we searched “big data” and “financial technology” in the same way, and found 286 papers on big data that came from 24 countries, while 779 papers on fintech came from 43 countries. This shows that blockchain is still an emerging research field, and it needs more countries and scholars to join in the research effort.

We counted the journals published in these papers and we found that 44 journals published related papers. Table  3 lists the top 11 journals to have published blockchain research. First is “Strategic Change: Briefings in Entrepreneurial Finance,” followed by “Financial Innovation” and “Asia Pacific Journal of Innovation and Entrepreneurship.” The majority of papers in the journal “Strategic Change” were published in 2017, except for one in 2018 and one in 2019. Papers in the journal “Financial Innovation” were generally published in 2016, with one published in 2017 and one in 2019. All five of the papers in the journal “Asia Pacific Journal of Innovation and Entrepreneurship” were published in 2017.

Cited references

Table  4 presents the top six cited publications, which were cited no less than five times. The list consists of three books and three journal articles. Some of these publications introduce blockchain from a technical perspective and some from an application perspective. Swan’s ( 2015 ) book illustrates the application scenarios of blockchain technology. In this book, the author describes that blockchain is essentially a public ledger with potential as a decentralized digital repository of all assets—not only tangible assets but also intangible assets such as votes, software, health data, and ideas. Tapscott and Tapscott’s ( 2016 ) book explains why blockchain technology will fundamentally change the world. Yermack ( 2017 ) points out that blockchain will have a huge impact and will present many challenges to corporate governance. Böhme et al. ( 2015 ) introduce bitcoin, the first and most famous application of blockchain. Narayanan et al. ( 2016 ) also focus on bitcoin and explain how bitcoin works at a technical level. Lansiti and Lakhani ( 2017 ) argue it will take years to truly transform the blockchain because it is a fundamental rather than destructive technology, which will not drive implementation, and companies will need other incentives to adopt blockchain.

Most influential articles

These 119 papers were cited 314 times in total, and 270 times without self-citations. The number of articles that they cited are 221, of which 197 are non-self-citations. The most influential articles with more than 10 citations are listed in Table  5 . The most popular article in our dataset is Lansiti and Lakhani ( 2017 ), with 49 citations in WOS. This suggests that this article has had a strong influence on the research of blockchain. This paper believes there is still a distance to the real application of the blockchain. The other articles describe how blockchain affects and works in various areas, such as financial services, organizational management, and health care. Since blockchain is an emerging technology, it is particularly necessary to explore how to combine blockchains with various industries and fields.

By comparing the journals in Tables 4 and 5 , we find that some journals appeared in both of the lists, such as Financial Innovation. In other words, papers on blockchain are more welcomed in these journals and the journal’s papers are highly recognized by other scholars. Meanwhile, although journals such as Harvard Business Review have only published a few papers related to blockchain, they are highly cited. Consequently, the journals in both of these lists are of great importance.

Research themes

Addressing research themes is crucial to understanding a research field and exploring future research directions. This paper explored the research topic based on keywords. Keywords are representative and concise descriptions of article content. First, we analyzed the most common keywords used by the papers. We find that the top five most frequently used keywords are “blockchain,” “bitcoin,” “cryptocurrency,” “fintech,” and “smart contract.” Although the potential for blockchain applications goes way beyond digital currencies, bitcoin and other cryptocurrencies—as an important blockchain application scenario in the finance industry—were widely discussed in these articles. Smart contracts allow firms to set up automated transactions in blockchains, thus playing a fundamentally supporting role in blockchain applications. Similar to the literature in all of the subject areas, studies in business and economics also frequently use bitcoin, cryptocurrency, and smart contract as their keywords. The difference is that many researchers have combined blockchain with finance, regarding it as an important financial technology.

After analyzing the frequency of keywords, we conducted a keywords clustering analysis to identify the research themes. As shown in Fig.  2 , five clusters were identified through the log-likelihood ratio (LLR) algorithm in Citespace, they are: cluster #0 “economic benefit,” cluster #1 “blockchain technology,” cluster #2 “initial coin offerings,” cluster #3 “fintech revolution,” and cluster #4 “sharing economy.”

figure 2

Disciplines and topics

Many researchers have studied the economic benefits of blockchain. They suggest the application of blockchain technology to streamline transactions and settlement processes can effectively reduce the costs associated with manual operations. For instance, in the health care sector, blockchain can play an important role in centralizing research data, avoiding prescription drug fraud, and reducing administrative overheads (Engelhardt 2017 ). In the music industry, blockchain could improve the accuracy and availability of copyright data and significantly improve the transparency of the value chain (O'Dair and Beaven 2017 ). Swan ( 2017 ) expound the economic value of block chain through four typical applications, such as digital asset registries, leapfrog technology, long-tail personalized economic services, and payment channels and peer banking services.

The representative paper for cluster “blockchain technology” was published by Lansiti and Lakhani ( 2017 ), who analyze the inherent features of blockchain and pointed out that we still have a lot to do to apply blockchain extensively. Other researchers have explored the characteristics of blockchain technology from multiple perspectives. For example, Xu ( 2016 ) explores the types of fraud and malicious activities that blockchain technology can prevent and identifies attacks to which blockchain remains vulnerable. Meanwhile, Aune et al. ( 2017 ) propose a cryptographic approach to solve information leakage problems on a blockchain.

Initial coin offering (ICO) is also a research topic of great concern to scholars. Many researchers analyze the determinants of the success of initial coin offerings (Adhami et al. 2018 ; Ante et al. 2018 ). For example, Fisch ( 2019 ) assesses the determinants of the amount raised in ICOs and discusses the role of signaling ventures’ technological capabilities in ICOs. Deng et al. ( 2018 ) argue the outright ban on ICOs might hamper revolutionary technological development and they provided some regulatory reform suggestions on the current ICO ban in China.

Many researchers have explored blockchain’s support for various industries. The fintech revolution brought by the blockchain has received extensive attention (Yang and Li 2018 ). Researchers agree that this nascent technology may transform traditional trading methods and practice in financial industry (Ashta and Biot-Paquerot 2018 ; Chen et al. 2017 ; Kim and Sarin 2018 ). For instance, Gomber et al. ( 2018 ) discuss transformations in four areas of financial services: operations management, payments, lending, and deposit services. Dierksmeier and Seele ( 2018 ) address the impact of blockchain technology on the nature of financial transactions from a business ethics perspective.

Another cluster corresponds to the sharing economy. A handful of researchers have focused on this field and they have discussed the supporting role played by blockchain in the sharing economy. Pazaitis et al. ( 2017 ) describe a conceptual economic model of blockchain-based decentralized cooperation that might better support the dynamics of social sharing. Sun et al. ( 2016 ) discuss the contribution of emerging blockchain technologies to the three major factors of the sharing economy (i.e., human, technology, and organization). They also analyze how blockchain-based sharing services contribute to smart cities.

In this section, we will discuss the following issues: (1) What will be the future research directions for blockchain? (2) How can businesses benefit from blockchain? We hope that our discussions will be able to provide guidance for future academic development and social practice.

What will be the future research directions for blockchain?

In view of the five themes mentioned in this paper, we provide some recommendations for future research in this section.

The economic benefits of blockchain have been extensively studied in previous research. For individual businesses, it is important to understand the effects of blockchain applications on the organizational structure, mode of operation, and management model of the business. For the market as a whole, it is important to determine whether blockchain can resolve the market failures that are brought about by information asymmetry, and whether it can increase market efficiency and social welfare. However, understanding the mechanisms through which blockchain influences corporate and market efficiency will require further academic inquiry.

For researchers of blockchain technology, this paper suggests that we should pay more attention to privacy protection and security issues. Despite the fact that all of the blockchain transactions are anonymous and encrypted, there is still a risk of the data being hacked. In the security sector, there is a view that absolute security can never be guaranteed wherever physical contact exists. Consequently, the question of how to share transaction data while also protecting personal data privacy are particularly vital issues for both academic and social practice.

Initial coin offering and cryptocurrency markets have grown rapidly. They bring many interesting questions, such as how to manage digital currencies. Although the majority of the previous research has focused on the determinants of success of initial coin offerings, we believe that future research will discuss how to regulate cryptocurrency and the ICO market. The success of blockchain technology in digital currency applications prior to 2015 caught the attention of many traditional financial institutions. As blockchain has continued to reinvent itself, in 2019 it is now more than capable of meeting the needs of the finance industry. We believe that blockchain is able to achieve large-scale applications in many areas of finance, such as banking, capital markets, Internet finance, and related fields. The deep integration of blockchain technology and fintech will continue to be a promising research direction.

The sharing economy is often defined as a peer-to-peer based activity of sharing goods and services among individuals. In the future, sharing among enterprises may become an important part of the new sharing economy. Consequently, building the interconnection of blockchains may become a distinct trend. These interconnections will facilitate the linkages between processes of identity authentication, supply chain management, and payments in commercial operations. They will also allow for instantaneous information exchange and data coordination among enterprises and industries.

How can businesses benefit from blockchain?

Businesses can leverage blockchains in a variety of ways to gain an advantage over their competitors. They can streamline their core business, reduce transaction costs, and make intellectual property ownership and payments more transparent and automated (Felin and Lakhani 2018 ). Many researchers have discussed the application of blockchain in business. After analyzing these studies, we believe that enterprises can consider applying blockchain technology in the four aspects that follow.

Accounting settlement and crowdfunding

Bitcoin or another virtual currency supported by blockchain technology can help businesses to solve funding-related problems. For instance, cryptocurrencies support companies who wish to implement non-cash payments and accounting settlement. The automation of electronic transaction management accounting improves the level of control of monetary business execution, both internally and externally (Zadorozhnyi et al. 2018 ). In addition, blockchain technology represents an emerging source of venture capital crowdfunding (O'Dair and Owen 2019 ). Investors or founders of enterprises can obtain alternative entrepreneurial finance through token sales or initial coin offerings. Companies can handle financial-related issues more flexibly by holding, transferring, and issuing digital currencies that are based on blockchain technology.

Data storage and sharing

As the most valuable resource, data plays a vital role in every enterprise. Blockchain provide a reliable storage and efficient use of data (Novikov et al. 2018 ). As a decentralized and secure ledger, blockchain can be used to manage digital asset for many kinds of companies (Dutra et al. 2018 ). Decentralized data storage means you do not give the data to a centralized agency but give it instead to people around the world because no one can tamper with the data on the blockchain. Businesses can use blockchain to store data, improve the transparency and security of the data, and prevent the data from being tampered with. At the same time, blockchain also supports data sharing. For instance, all of the key parties in the accounting profession leverage an accountancy blockchain to aggregate and share instances of practitioner misconduct across the country on a nearly real-time basis (Sheldon 2018 ).

Supply chain management

Blockchain technology has the potential to significantly change supply chain management (SCM) (Treiblmaier 2018 ). Recent adoptions of the Internet of Things and blockchain technologies support better supply-chain provenance (Kim and Laskowski 2018 ). When the product goes from the manufacturer to the customer, important data are recorded in the blockchain. Companies can trace products and raw materials to effectively monitor product quality.

Smart trading

Businesses can build smart contracts on blockchain, which is widely used to implement business collaborations in general and inter-organizational business processes in particular. Enterprises can automate transactions based on smart contracts on block chains without manual confirmation. For instance, businesses can file taxes automatically under smart contracts (Vishnevsky and Chekina 2018 ).


This paper reviews 756 articles related to blockchain on the Web of Science Core Collection. It shows that the most common subject area is Computer Science, followed by Engineering, Telecommunications, and Business and Economics. In the research of Business and Economics, several key nodes are identified in the literature, such as the top-cited articles, most productive countries, and most common keywords. After a cluster analysis of the keywords, we identified the five most popular research themes: “economic benefit,” “blockchain technology,” “initial coin offerings,” “fintech revolution,” and “sharing economy.”

As an important emerging technology, blockchain will play a role in many fields. Therefore, we believe that the issues related to commercial applications of blockchain are critical for both academic and social practice. We propose several promising research directions. The first important research direction is understanding the mechanisms through which blockchain influences corporate and market efficiency. The second potential research direction is privacy protection and security issues. The third relates to how to manage digital currencies and how to regulate the cryptocurrency market. The fourth potential research direction is how to deeply integrate blockchain technology and fintech. The final topic is cross-chain technology—if each industry has its own blockchain system, then researchers and developers must discover new ways to exchange data. This is the key to achieving the Internet of Value. Thus, cross-chain technology will become an increasingly important topic as time goes on.

Businesses can benefit considerably from blockchain technology. Therefore, we suggest that the application of blockchain be taken into consideration when businesses have the following requirements: accounting settlement and crowdfunding, data storage and sharing, supply chain management, and smart trading.

Our study has recognized some limitations. First, this paper only analyzes the literature in Web of Science Core Collection databases (WOS), which may lead to the incompleteness of the relevant literature. Second, we filter our literature base on the subject category in WOS. In this process, we may have omitted some relevant research. Third, our recommendations have subjective limitations. We hope to initiate more research and discussions to address these points in the future.

Availability of data and materials

Data used in this paper were collected from Web of Science Core Collection.


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This research is supported by grants from National Natural Science Foundation of China (Nos. 71701168 and 71701034).

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Three generations of blockchain

The scope of blockchain applications has increased from virtual currencies to financial applications to the entire social realm. Based on its applications, blockchain is delimited to Blockchain 1.0, 2.0, and 3.0.

Blockchain 1.0

Blockchain 1.0 was related to virtual currencies, such as bitcoin, which was not only the first and most widely used digital currency but it was also the first application of blockchain technology (Mainelli and Smith 2015 ). Digital currencies can reduce many of the costs associated with traditional physical currencies, such as the costs of circulation. Blockchain 1.0 produced a great many applications, one of which was Bitcoin. Most of these applications were digital currencies and tended to be used commercially for small-value payments, foreign exchange, gambling, and money laundering. At this stage, blockchain technology was generally used as a cryptocurrency and for payment systems that relied on cryptocurrency ecosystems.

Blockchain 2.0

Broadly speaking, Blockchain 2.0 includes Bitcoin 2.0, smart-contracts, smart-property, decentralized applications (Dapps), decentralized autonomous organizations (DAOs), and decentralized autonomous corporations (DACs) (Swan 2015 ). However, most people understand Blockchain 2.0 as applications in other areas of finance, where it is mainly used in securities trading, supply chain finance, banking instruments, payment clearing, anti-counterfeiting, establishing credit systems, and mutual insurance. The financial sector requires high levels of security and data integrity, and thus blockchain applications have some inherent advantages. The greatest contribution of Blockchain 2.0 was the idea of using smart-contracts to disrupt traditional currency and payment systems. Recently, the integration of blockchain and smart contract technology has become a popular research topic in problem resolution. For example, Ethereum, Codius, and Hyperledger have established programmable contract language and executable infrastructure to implement smart contracts.

Blockchain 3.0

In ‘Blockchain: Blueprint for a New Economy’, Blockchain 3.0 is described as the application of blockchain in areas other than currency and finance, such as in government, health, science, culture, and the arts (Swan 2015 ). Blockchain 3.0 aims to popularize the technology, and it focuses on the regulation and governance of its decentralization in society. The scope of this type of blockchain and its potential applications suggests that blockchain technology is a moving target (Crosby et al. 2016 ). Blockchain 3.0 envisions a more advanced form of “smart contracts” to establish a distributed organizational unit that makes and is subject to its own laws and which operates with a high degree of autonomy (Pieroni et al. 2018 ).

The integration of blockchain with tokens is an important combination of Blockchain 3.0. Tokens are proofs of digital rights, and blockchain tokens are widely recognized thanks to Ethereum and its ERC20 standard. Based on this standard, anyone can issue a custom token on Ethereum and this token can represent any right or value. Tokens refer to economic activities generated through the creation of encrypted tokens, which are principally but not exclusively based on the ERC20 standard. Tokens can serve as a form of validation of any right, including personal identity, academic diplomas, currency, receipts, keys, event tickets, rebate points, coupons, stocks, and bonds. Consequently, tokens can validate virtually any right that exists within a society. Blockchain is the back-end technology of the new era, while tokens are its front-end economic face. The combination of the two will bring about major societal transformation. Meanwhile, Blockchain 3.0 and its token economy continue to evolve.

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blockchain in finance services or fintech research paper



Blockchain and supply chain finance: a critical literature review at the intersection of operations, finance and law

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In the current environment, where the Covid-19 pandemic has exposed the vulnerabilities of the incumbent paper-based trade and supply chain finance systems, digital transformation pledges to alleviate the friction on international trade. Here, we provide a timely review of state-of-the-art industry applications and theoretical perspectives on the use of blockchain as the medium toward digitalisation for supply chain finance systems. We argue that blockchain technology has an innovation promoting role in supply chain finance solutions through reducing inefficiencies and increasing visibility between different parties, which have hitherto constituted the main challenges in this sphere. Based on a review of the academic literature as well as an analysis of the industrial solutions that have emerged, we identify and discuss the financial, operational and legal challenges encountered in supply chain financing and the promise of blockchain to address these limitations. We discuss the bottlenecks as well as the benefits of blockchain and identify some necessary conditions required for the emergence of blockchain-enabled trade and supply chain financing, such as the establishment of co-opetition among supply chain actors, integration with IoT systems for data quality, and reform of regulatory and legal frameworks. We conclude by identifying promising research directions about the implementation process, inviting further research into the transformation of business models toward a more collaborative nature.

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1 Introduction

An important but still relatively undervalued use case of blockchain technology is Supply Chain Finance (SCF). Up to \(80\%\) of international trade transactions require trade and SCF to provide liquidity and risk mitigation [ 42 ]. The financing of trade transactions was estimated by the European Commission to be worth USD 10 trillion in 2017 alone [ 98 ]. It includes both various methods for the discharge of the payment obligation as well as techniques and practices for the optimisation of the working capital invested in supply chain transactions, such as receivables purchase techniques or accounts payable-centric finance. However, the ingrained reliance of trade and supply chain financing on paper-based documentation has driven up costs and caused inefficiencies. Fragmented processes, discordance of regulations, and the increased risk of fraud contribute together to a USD 1.5 trillion supply-demand gap in the financing of trade [ 2 ], which, if left unresolved, is expected to exceed USD 2.4 trillion by 2025 [ 155 ].

While SCF is difficult to obtain for many stakeholders in an ordinary business environment, the ongoing pandemic and global recession magnify the existing pain points and barriers in SCF and pose new ones of unprecedented scale [ 73 ]. Most of the problems being faced today originate from the paper medium used in SCF and relate to the delivery and the handling of physical documents, the lack of staff, the inability to print, and business closures due to lockdown restrictions [ 96 , 108 ]. Moreover, the necessity of validating the originality of documents and the legal matters that emanate from jurisdictions requiring wet-ink signed payment obligations and transport documents have challenged the industry’s capacity to deal with this unrivalled disruption on a global scale [ 73 ]. The existing gap in the financing of trade, which according to the International Financing Corporation of the World Bank Group is now anticipated to exceed USD 4 trillion [ 74 , 121 , 139 ], is set to double.

In essence, SCF techniques aim to reliably establish the creditworthiness of the buyer of goods and approve that the sellers of goods have manufactured and shipped them [ 9 ]. The past five years have witnessed a proliferation of research, initiatives and discussions regarding blockchain as the medium toward digitalisation of the supply chain [ 85 , 86 , 87 , 120 ]. Significant advancements have been made and the obstacles are gradually being removed, improving the efficacy of information flow in the supply chain and increasing the flexibility of the financial supply chain [ 17 , 33 , 48 ], both of which run alongside the physical supply chain [ 157 ]. The aim of this review is to complement the literature’s interest in the usability of blockchain in international trade and to identify the main drivers and challenges of digital transformation within the trade and supply chain finance industry.

In this context, there are several reasons for undertaking a critical literature review on the interface of blockchain and supply chain finance. First, the industry has expressed a keen interest in adopting new technologies and SCF is well oriented in innovative financing solutions. Second, the growing body of academic literature [ 23 ] and the emerging range of supply chain financing systems deserve a review, which will illuminate the benefits and the limitations of blockchain SCF procedures. Third, whilst previous research focuses either on blockchain implementation in supply chain operations [ 15 , 160 ] or on analysing supply chain financing solutions [ 10 , 54 , 158 ], this is the first specialised review combining the literatures on both blockchain and SCF, and it uncovers knowledge from companies that are pioneering blockchain in their SCF products.

We focus on three research questions in providing an overview of the research on blockchain technology in SCF:

What are the key operational, financial, and regulatory barriers holding back innovation in SCF?

How can blockchain technology support digital SCF integration and could it give rise to new and innovative SCF solutions?

What are the implementation challenges of blockchain adoption in SCF?

The remainder of this paper is organised as follows. Section 2 summarises the basic concepts related to SCF and blockchain technology, providing an account of the various SCF techniques as well as an introduction to blockchain foundations. The findings of our analysis of the literature are provided in Sect. 3 , revealing the state-of-the-art developments in both theory and practice. To that end, Sect. 4 discusses the insights the literature offers for the barriers and pain-points of SCF systems, the ways blockchain can alleviate these, and the implementation challenges for the adoption of blockchain-based SCF systems. This section goes on to identify promising research directions using a cross-disciplinary perspective, and it concludes by presenting the limitations of this study. The review concludes with a summary of the main contributions in Sect. 5 .

2 Background

2.1 supply chain finance.

SCF is a micro-finance concept defined as the use of financial instruments, practices, and technologies for optimising the management of the working capital and liquidity tied up in supply chain processes between collaborating business partners [ 19 ]. According to Xu et al. [ 158 ] and Ali et al. [ 4 ], the term was introduced by Stemmler [ 131 ], who explained that SCF constitutes an essential part of supply chain management (SCM) and aims to integrate finance with the supply chain operations. The appeal of SCF is to mitigate the payment and performance risks and to concurrently offer to the supplier accelerated receivables and to the buyer protracted credit [ 23 , 54 ]. It is distinct from trade finance, which is an overarching term describing the financing of trade in general [ 141 ] and which is traditionally associated with financing techniques governed by rules published by the International Chamber of Commerce (ICC), such as the Uniform Rules for Collections (URC 522) for Documentary Collections, Uniform Rules for Demand Guarantees (URDG 758) for Guarantees, and the Uniform Customs and Practice for Documentary Credits (UCP 600) for Letters of Credit (L/Cs) [ 62 ].

While the financial supply chain usually refers to the discharge of the payment obligation by the buyer upon receipt of evidence of contractual performance by the seller [ 57 ], SCF is a more complex notion and scholars have taken a range of different approaches. According to Hofmann [ 67 ], SCF is an approach of two or more organisations ‘to jointly create value through means of planning, steering and controlling the flow of financial resources on an inter-organisational level’. Similarly, Pfohl and Gomm [ 111 ], define SCF at the inter-company level as the ‘integration of financing processes to increase the value of all participating companies’. A comprehensive literature review dealing with the various definitions of SCF, and its specific solutions, is provided by Gelsomino et al. [ 54 ], who identified two major perspectives: financial-oriented, which refers to short-term receivables and payables SCF solutions provided by financial institutions, and supply chain-oriented perspective, which extends SCF scope to include the capitalisation of inventories and financing provided by non-banks [ 22 , 54 ]. While earlier reviews [ 54 , 158 ] cover papers from 2000 to 2016, this paper focuses on current developments in the field, specifically blockchain-enabled solutions.

SCF solutions are designed to increase the visibility and the availability of cash and reduce its cost for all supply chain partners [ 58 , 60 ] with a view to optimise the management of financial flows at the supply chain level [ 55 ]. Some scholars focus more on the central role that banks play in SCF [ 31 , 93 , 157 ], defining SCF as the set of products that a financial institution offers to facilitate the management of the material and information flows in a supply chain [ 21 ]. Others consider technology an essential component in the SCF scheme, describing it as financial services solutions stemming from technology service providers [ 36 , 89 ]. In the operations management literature, SCF solutions have been classified with respect to the party that provides the financing, i.e. trade credit, buyer finance and inter-mediated finance [ 10 , 34 , 135 ]. All the aforementioned elements are summarised in a definition suggested by the Global Supply Chain Finance Forum (GSCFF), which describes SCF as ‘the use of financing and risk mitigation practices and techniques to optimise the management of working capital and liquidity invested in supply chain processes and transactions’ [ 56 ]. This article will hereinafter build upon this definition and use the relevant terminology suggested by the GSCFF, which applies irrespective of the role or the existence of an intermediary and the specific enabling technology.

At a basic level, SCF consists of receivables purchases (receivables discounting, forfaiting, factoring and receivables securitisation), payables finance (dynamic discounting, reverse factoring and reverse securitisation) and borrowing using trade credit/accounts receivables as collateral (loan or advance against receivables, distributor finance, inventory finance and pre-shipment finance) [ 31 ]. In Table 1 , we provide the most commonly used definitions and the synonyms of the SCF techniques based on the classification recommended in Global Supply Chain Finance Forum [ 56 ].

Despite the variations among these mechanisms, a common feature of all SCF techniques is their need to access and process trustworthy trade data [ 57 , 92 ]. This is because SCF is an event-driven financing solution in that each intervention in the financial chain is ‘triggered’ by an event in the physical chain [ 4 , 165 ]. For example, receivables purchase techniques require access to reliable trade documentation which can verify the receivables, such as invoices or e-invoices [ 57 ]. Similarly, loan or advance-based techniques require access to data that can evidence the expectation of repayment such as, purchase order confirmations, transport documentation and warehouse receipts, while the trigger event in payables financing solutions is usually proved with the approval of the invoice from the buyer [ 69 ]. The coupling of information and material flows enables financers to reduce both the financial and operational risks within the supply chain and mitigate the credit risk [ 10 , 92 ], thereby enabling capital-constrained firms to access capital sooner and at lower rates [ 31 , 93 ]. This work investigates how the adoption of blockchain technology increases visibility into reliable trade data and allows businesses to form partnerships and accelerate cash flows throughout the financial supply chain.

2.2 Foundations of blockchain technology

Blockchain is a digital distributed ledger of time-stamped series of data records that is stored on a cluster of computers where no single entity has control, and the information is visible to all parties [ 52 , 137 ]. Transactions are broadcasted to the network and the full-node participants validate them directly through the operation of a consensus mechanism [ 7 ]. The full-node participants or miners validate whether there is a successful delivery from the sender to the recipient and examine the veracity of the signed acknowledgements provided by the intermediate nodes [ 63 ]. An encryption method secures data against unauthorised interference to ensure censor-resistance and to safeguard sensitive information [ 41 ]. A key aspect of blockchain is its anti-double spending feature, which ensures that a person transferring an asset in the form of unspent transaction outputs/inputs [ 7 ] or in the form of a balance within an account [ 8 ] cannot transfer the same asset more than once [ 137 ].

Blockchains are classified as permission-less (‘public’) and permissioned, in alignment with the extent to which nodes may be involved in the consensus process [ 52 , 164 ]. In a permission-less blockchain, such as Bitcoin or Ethereum, anyone can run as a pseudonymous full node, make contribution, and receive awards pursuant to the corresponding rules. Permissioned blockchains can be further categorised into private and consortium-based blockchains. Simply put, consortium Blockchains, such as the Hyperledger project, have a governance structure and consensus procedures controlled by pre-set nodes in the system [ 20 ]. In private blockchains, which can be built on Hyperledger Fabric [ 6 ] or Corda [ 64 ], for example, access is controlled by a single organisation [ 137 ]. A comparison of key features among different types of blockchain is provided in Chang et al. [ 25 ] and Tasca and Tessone [ 137 ], who argue that the extent of decentralisation is weaker in permissioned blockchains, but the speed of transaction validation is faster [ 146 ]. It is noted that an extensive discussion regarding the differences and the similarities between different blockchains of the same class/type regarding their appropriateness for SCF techniques is, to the best of our knowledge, absent from the literature.

From a technical perspective, blockchain comprises a decentralised data infrastructure employing a cryptographic hash function [ 45 ]. It can be considered as an infrastructure layer that runs on top of the internet and which is suitable for recording, tracing, monitoring, and transacting all type of assets on a global scale [ 149 ]. The first blockchain application was a data protocol for keeping the chronological records of Bitcoin transactions [ 105 ]. Since then, blockchain technology has been hailed as an ingenious innovation with countless possibilities for applications in numerous areas [ 41 , 136 ]. In this regard, the digitisation of documents and the tokenisation of assets into the blockchain can help dismantle financing barriers and pain points in international trade transactions. In the next sections we will examine how blockchain can address existing inefficiencies in trade and supply chain finance processes based on a detailed review of the extant literature.

2.3 Contribution to the literature

Blockchain technology is a significant high-tech breakthrough that may revolutionise SCF. This paper is one of a few works that endeavour to illuminate the positive disruption caused by blockchain for trade and supply chain finance processes. The review examines the existing research on the subject matter and highlights the identified gaps in the literature. It proposes a re-examination of the subject matter through the prism of foundational concepts and results from supply chain management (SCM), economics, legal analysis and platform theory. The provided practical and theoretical insights can be conducive to reflection by SCF practitioners and serve as a base for future academic studies on blockchain adoption in SCF.

3 Current developments in blockchain supply chain finance

This section presents the scientific publications identified through the research protocol outlined in Appendix  1 and the state-of-the-art business developments. Some common themes observed in the literature and in practice are summarised in this section. The areas in which blockchain provides most value to SCF will be explored in the next section.

3.1 Academic literature

Although blockchain is still in its nascence, its capacity for trade and supply chain finance has already been acknowledged in the academic literature, where related value-added activities are being mapped and several implementation systems have been proposed. Bogucharskov et al. [ 17 ] have proposed a blockchain prototype of a documentary Letter of Credit (L/C). Similarly, Chang et al. [ 26 ] and Tsiulin et al. [ 144 ] discuss modern blockchain-supported L/C services built on a consortium blockchain, while Chang et al. [ 25 ] recommend the re-engineering of L/Cs via smart contracts, which is argued to improve the performance of the payment process and enhance the overall supply chain efficiency.

Chen et al. [ 30 ] leverage blockchain, alongside systems and technologies such as cloud computing and the Internet of Things (IoT), to establish an integrated SCF platform running as-a-service for the automotive retail industry. The platform, called Blockchain auto SCF, provides equal visibility on transactions and collateral custody information to interested parties and collaborates with financial institutions to supply inventory financing and purchase order financing [ 30 ]. Yu et al. [ 162 ] move beyond the performance analysis of operations under the existing SCF techniques and propose a new model for SCF that enables a platform-based financer to offer the best SCF solutions under different conditions and to optimise service fees and price setting based on the client’s opportunity cost rate for self-guarantee. This is achieved by leveraging reliable information stored in a blockchain that demonstrate to the financer, based on the customer’s operational information, the sufficiency of the credit or assets. The proposed model also enables the customer to mortgage its assets, which can range from raw materials to finished products, and transfer these assets to the financer in case of default, all happening in an integrated manner on the blockchain [ 162 ].

In their analysis, Omran et al. [ 107 ] describe the use cases of blockchain for reverse factoring and dynamic discounting. Reverse factoring can be optimised because blockchain enables invoice status information to be transferred securely, allowing financiers to offer high-frequency financing services for any transaction value at lower risk [ 107 ]. In conjunction with smart contracts, blockchain can improve the access to reliable real-time information and automate decision-making through the integration of financial and informational flows in supply chains [ 93 , 157 ]. That way, the risk premium of an early payment financing proposal can be continuously adjusted at each step of the material flow [ 107 ]. Hofmann et al. [ 69 ] discuss applications in various buyer-led SCF techniques and examine a new solution that implements blockchain-based reverse-securitisation. Specifically, they propose the issuing and post-trade clearing and settlement processing of the asset-backed securities that require various intermediaries, data reconciliations and manual intervention to be issued directly into the blockchain as digital assets, thereby switching the ultimate record of ownership from central depositories and custodians onto a blockchain. By doing so they expound an effective and instantaneous clearing and settlement mechanism leading to lower financing costs [ 69 ]. Moreover, Li et al. [ 94 ] introduce a blockchain use-case in logistics finance to tackle financing shortages for SME retailers. They propose a blockchain-enabled logistics finance execution platform, whereby retailers, suppliers, commercial institution financers and third-party logistics providers can arrange inventory financing by leveraging dynamic pledge of warehouse operations [ 94 ]. Du et al. [ 45 ] integrate the characteristics of blockchain to solve the problem of non-trust and information asymmetry among the participants in the supply chain and present a solution for warehouse receipts financing through a service platform, which has already been active for a year and has served more than 500 companies in China with an accumulated transaction value of USD 1.2 billion.

The benefits of blockchain in eliminating or reducing information asymmetry have recently been analysed using game theory in Chod et al. [ 35 ] and Lee et al. [ 91 ]. Based on a signalling game between a buyer and a bank, Chod et al. [ 35 ] show that signalling operational quality through larger purchase order quantities leads to less disruptions than cash signalling in the form of inflated loan requests. Inventory signalling requires the bank to verify supply chain transactions, which calls for the use of blockchain. Accordingly, Chod et al. [ 35 ] introduce a Bitcoin-based low-cost transaction verification protocol that maintains privacy. The study postulates that a high-type buyer is more likely to adopt blockchain if its reliability increases, if the product has no salvage value, e.g. highly customised or perishable, if its market size increases, and if the verification costs are lower. Focusing on transaction costs, Choi [ 36 ] shows that blockchain-based transactions in a newsvendor setting lead to higher profit than a bank-mediated trade, if the blockchain transaction costs are sufficiently lower than the bank charges. Lee et al. [ 91 ] compare dynamic interest rates with uniform interest rates in an abstract multi-stage trade finance setting where the bank may benefit from blockchain by reducing the information asymmetry or improving the efficiency of information flows. When there are long delays in collecting reliable information, the blockchain is required for the dynamic interest rates to be rewarding [ 91 ]. The academic studies on blockchain SCF are summarised in Table 2 .

3.2 Industrial projects and initiatives

The use of blockchain for SCF is being explored by incumbent market leaders as well as start-up companies. Many proof-of-concepts, piloting, or entering production schemes have been developed in the last five years. The purpose of this section is to analyse these newly emerging blockchain projects in trade and supply chain finance and to identify how they enhance existing processes. Table 3 presents a list of popular blockchain-enabled SCF initiatives identified through a practical case-based research on the grey literature.

The findings indicate that reviewed projects can be compiled into categories according to the problems they are trying to solve. For example, We.Trade, Skuchain, and eTradeConnect utilise various business models to enhance existing processes and provide better SCF products through sharing of information and digitisation of the relevant paper-based documentation. Blockchain is also being used under Letters of Credit (L/C) by the Contour network, Financle Trade Connect, and TradeFinex, which are among the most popular trade finance projects in the industry. Similarly, the Marco Polo Network, which consists of 30 banks, aims to facilitate SCF solutions via a DLT-based platform inter alia by providing distributed data storage and bookkeeping, identity management, and asset verification [ 109 ]. In this context, the Digital Ledger Payment Commitment (DLPC) provides a payment undertaking in digital form on a blockchain for use in any trade finance transaction, which is legally binding, enforceable, negotiable and independent in a sense that it is not contingent on the underlying trade transaction [ 43 ]. Komgo and Clipeum do not only offer digital trade finance-related products, but also Know-Your-Customer (KYC) compliance services which enable the transmission of data stored in a blockchain-based platform among the participating entities on a need-to-know basis [ 39 , 129 ]. Some projects, such as Chained Finance, Halotrade, Skuchain, Hyperchain and Ant Blockchain Open Alliance leverage DLT to enhance financial transparency of micro, small and medium-sized enterprises (MSME) [ 151 ]. Skuchain, specifically, utilises a blockchain system to enhance buyer’s visibility into their inventory and provide better financing to MSMEs by allowing them to get financing at the buyer’s cost of capital, whereas Hyperchain can digitise the accounts receivable, store them in the blockchain, and based on secure information sharing allows MSMEs to benefit from the credit status of the core enterprises, such as large manufacturers. To solve the issue of inter-operability among the various blockchain-based networks and other technology platforms, organisations, such as TradeFinex and the International Chamber of Commerce’s (ICC) Digital Trade Standards Initiative (DSI), are focusing on technical standardisation [ 109 ]. An extensive analysis of each identified project is beyond the scope of this study withal. In the following section the review combines information extracted from these projects and the literature to underline how specific features of blockchain technology can address existing inefficiencies in SCF.

4 Findings and discussion

This section analyses both the academic literature and blockchain-based SCF projects from the perspectives of (i) pain points and barriers in existing SCF processes, (ii) the promise of blockchain-driven SCF solutions, and (iii) implementation challenges.

4.1 Pain points and barriers in supply chain finance

Considering that blockchain solutions apply to different existing problems, understanding the pain points and barriers in SCF processes is necessary to perceive how blockchain can revolutionise SCF. The analysis of the selected literature suggests that lack of visibility in physical supply chain processes, time consuming and inefficient manual paperwork, regulatory and compliance related costs, the risk of fraud, and high transaction costs are essential barriers in SCF in general.

4.1.1 Lack of supply chain visibility

The visibility across the supply chain has been shown to be a crucial requirement for trust, collaboration, and coordination in supply chains, resulting in the stabilisation of material flows, reduction in demand distortion and increased efficiency and agility [ 12 , 29 , 51 , 133 , 161 ]. For supply chain finance, the end-to-end visibility of financers into the material flows as well as the financial flows from invoice to cash is essential [ 35 , 88 ]. However, even the biggest corporations lack the capacity to access reliable and up-to-date information throughout their extended supply networks [ 103 , 153 ]. The principal cause of high financing rates and transaction costs in the incumbent trade and supply chain finance processes is the risk premium due the lack of transparency in credit evaluation processes [ 65 , 93 ]. Moreover, the limited visibility does not only ignite more than 25,000 disputes in SCF every year with USD 100 million tied up at any given time [ 15 ], but also hampers the collection of receivables for the core firm [ 47 , 92 ]. The lack of visibility impedes trust and commitment among supply chain partners [ 46 , 119 ] and foments moral hazard problems [ 34 ] as well as more general adverse effects of information asymmetry [ 35 , 91 ], which result in sub-optimal operational decisions that expose stakeholders in supply chains to financial risks [ 10 , 13 , 127 ]. As a result, many actors in the chain operate in opacity and a large group of MSMEs are precluded from SCF [ 45 ], especially if they do not transact directly with the core enterprises [ 93 ].

4.1.2 Laborious and inefficient processing of manual paperwork

The ingrained dependence of SCF on paper-based documentation has driven up costs and caused inefficiencies in SCF [ 2 , 36 , 117 , 144 ]. Sequential input and manual checking of the paper documentation is costly and error prone [ 25 , 30 ], and results in delays in invoice reconciliation as well as in the receipts of payments [ 103 ]. Costs occur from the complexity of inter-organisational supply chain collaboration and intra-firm cross-functional coordination [ 124 , 165 ]. Tedious, time-consuming and opaque document flows that use a computer-paper-computer manual operation model [ 85 ] introduce errors and risks [ 155 ], resulting in high administrative costs [ 25 ] and expensive billing operations [ 15 ]. The cost of processing this paperwork is estimated to be between 5 and 10 percent of the transaction value [ 148 ].

4.1.3 Regulatory and compliance-related barriers

One of the biggest hurdles of the existing SCF processes is the regulatory requirements that have been imposed on financial institutions [ 74 , 103 , 117 ]. According to a survey conducted by the Asian Development Bank (ADB), which investigated the reasons behind the rejection of financing applications by banks, \(76\%\) of the surveyed banks highlighted the cost and complexity of conducting Anti-Money-Laundering (AML) and KYC checks as the principal barriers in expanding their trade and supply chain finance operations [ 1 ]. Considering that the approval of SCF applications is manual and complex, usually only the most well-known applicants are currently being approved, while MSMEs applications remain under-served [ 2 , 74 ]. Therefore, AML/KYC compliance procedures increase transaction costs and lower the profit margin, thereby reducing the chances of SCF applications being accepted and causing a shortage of SCF around the globe [ 62 ].

4.1.4 Risk of fraud

The massive amount of money and documents changing hands in trade and supply chain finance transactions render them susceptible to attack from fraudsters [ 15 , 30 , 74 ]. The risk of fraud can be defined as the possibility that the receivable does not exist or varies from how it is represented [ 62 ]. L/Cs, purchase orders, invoices, warehouse receipts, and bills of lading (B/Ls) are all subject to tampering and alteration [ 14 , 98 ]. Some common types of trade finance fraud are multiple invoicing, over-invoicing, duplicate B/Ls that are financed multiple times, forged B/Ls and L/Cs, and backdating of transport documents [ 28 , 62 ] or even repeated pledges and empty pledges caused by asymmetric information and adverse selection [ 25 , 93 ]. Fraudulent trade and supply chain financing deals plague SCF as evidenced by the USD 10 billion uncovered fraudulent deals only in China during the year of 2014 [ 62 ].

4.2 Corresponding benefits of blockchain-driven supply chain finance

The barriers and challenges highlighted above have created a need for digitalisation in the SCF sphere. As discussed in previous parts, blockchain integration emerges as the most promising drive towards digitalisation of the SCF processes. Blockchains pledge to streamline the flow of information in supply chains and achieve the synchronisation of material, information, and financial flows [ 10 , 95 ]. In the following, we analyse the ways the blockchain-driven SCF has been proposed or shown to address the challenges above based on the review of the academic studies and the industry applications summarised in Tables  2 and 3 , respectively.

4.2.1 End-to-end supply chain visibility

The increased supply chain visibility has been presented as a pillar of blockchain technology [ 9 , 113 ]. Due to the integrity and immutability of records, blockchain enables real-time trade and cargo information from a single source of truth [ 92 , 150 ]. For example, Tradelens provides real-time visibility of the progress of goods and documents in the container transportation industry through its blockchain ecosystem [ 78 ]. Visibility provides transparency, which is crucial for orchestrating SCF programs [ 92 ] as it solves issues of information asymmetry within the supply chain that drive financing costs higher [ 45 , 93 ]. Since the SCF decisions and premiums are driven by the fluctuation of credit risk [ 55 ], information transparency provided by blockchain enables financers not only to view the credit history of the applicant [ 47 ], but also to monitor other related operational and financial data, such as order quantities, latest warehouse, shipping, and payment statuses [ 69 ], thereby gauging their risk estimations dynamically [ 91 ]. The traceability of collaterals in providing SCF solutions is a key benefit distinguishing blockchain ecosystems from other existing platforms [ 9 , 30 ]. It could also provide an unacknowledged applicant, such as an SME, with the opportunity to evidence its creditworthiness to a financer, thereby securing favourable financing terms with improved operational performance [ 35 , 36 ].

4.2.2 Increased speed and operational efficiencies enabled by digitalisation, smart-contracts, and the Internet of Things (IoT)

The promises to expedite transactional processes and to lower the overall costs of financing bring substantial benefits to all stakeholders involved in an SCF transaction [ 25 ]. Hofmann et al. [ 69 ] argue that the combination of blockchain with IoT can maintain device connectivity and deliver material flow tracing across the supply network so to adjust the risk premium throughout the shipping process. IoT enables feeding the blockchain with instant information via sensors, rather than having to rely on human ‘oracles’ to transmit data about the physical movement of goods [ 26 ]. This application involves using Radio Frequency Identification (RFID) tags, GPS tags, and other chips in the form of installed detectors throughout the physical chain [ 147 , 159 ] to achieve real-time monitoring and tracking of data [ 120 ], which can be leveraged by smart contracts to automate the execution of transactions [ 93 , 149 ]. The latter constitute automatable and enforceable agreements that can run on blockchains by coding various contractual terms into computer code [ 24 , 134 ]. Undoubtedly, there is a resemblance between the programmable nature of smart contracts and the state-contingent character of traditional trade finance procedures, such as documentary collections and L/Cs [ 17 ]. For example, trade finance techniques, are usually designed to release a tranche by detecting that some pre-determined conditions have been met, such as that a B/L has been sent or that a shipment has been made [ 25 , 159 ]. The flexibility of smart contracts renders them suitable to automate further SCF solutions, such as receivables or payables finance. Automation is achieved through implementing staged trigger points for key events for a range of SCF solutions [ 69 , 93 , 112 ], resulting thus in efficient, transparent and cost-effective flow of information and value [ 150 ].

In practice, numerous initiatives have been vigorously researching blockchain-supported proposals that tackle the inefficiencies occurring from manual processing of information in trade finance (see cases from Komgo to Marco Polo in Table 3 ). For instance, by utilising a blockchain-based network that links all the entities involved in a L/C transaction, platforms like Finacle Trade Connect and Contour have achieved to reduce the end-to-end processing time by 90 per cent. Similarly, Komgo promotes structured data fields instead of documents in its platform, so that it can streamline seamlessly the entire document workflow in trade finance transactions in its platform. More ambitiously, TradeFinex provides a marketplace for peer-to-peer trade and SCF transactions utilising cryptocurrencies. The BAFT DLPC provides a legally binding digital payment commitment in fiat currency, which can inter-operate with Skuchain to digitalise L/Cs and other trade and SCF transactions and automate execution of these instruments through smart-contracting [ 156 ].

4.2.3 Reduced regulatory costs

Blockchains constitute distributed trustworthy databases, shared by a community, which can be used for KYC, Customer Due Diligence (CDD), and AML purposes [ 25 , 117 ]. The key functionality for financers of an immutable ledger, in which near real-time data are recorded, is the provision of reliable evidence about new clients, such as IDs and any relevant background documentation [ 69 , 159 ]. Process integrity, disintermediation and decentralisation can enable secure information sharing amongst various parties [ 120 ], thereby rendering it possible to eliminate duplication of regulatory compliance processes, such as KYC checks, by sharing the existing information on a blockchain so that other financers would no longer need to execute the same controls manually [ 52 , 107 ]. Blockchain can, thus, enable a system where all financers simultaneously hold KYC data and benefit from economies of scale resulting from checks needing to be undertaken only once [ 11 , 164 ]. As evidenced in Table  3 , some blockchain projects, such as Clipeum or Komgo, are building platforms where the members can upload KYC documents and authorise other participants to consult these documents upon request on a need-to-know basis [ 39 , 66 ]. Therefore, blockchain could assist in credit checks, diminish compliance costs, and, thus, simplify the establishment of SCF programs.

4.2.4 Mitigated fraud risk

As explained in Han et al. [ 62 ] and Lawlor [ 90 ], the primary aim of tokenising trade documents on a blockchain is to avoid fraud and double-financing issues. As an immutable and shared registry [ 150 ], blockchain can preserve the integrity and authenticity of the trading background, including shipping and warehouse status and purchase order data, which are vital for SCF techniques [ 93 ]. Each document is hashed and time-stamped to create an original identifier, and, if a malicious actor attempts to use the same document for financing purposes through the platform, that identifier signals the previous case of financing to all parties [ 69 ]. Thus, blockchains limit forgery and multi-financing issues in, for example, inventory financing, pre-shipment financing, advance against receivables and distributor finance techniques [ 69 ], thereby enhancing SMEs credibility to obtain financing from previously hesitant financers [ 94 ].

4.3 Implementation challenges to further adoption of blockchain technology in the SCF sphere: toward a more collaborative business model?

Thus far, this paper discusses how blockchain technology can transform trade and supply chain finance processes. This section reveals the challenges associated with blockchain implementation in this environment, which are summarised in Table  4 .

4.3.1 Business implementation challenges

A decentralised and immutable database which enables SCF stakeholders to securely share peer-to-peer digital trade documentation and tokenised assets entails a paradigm shift toward automation, real-time risk management, and cheap, efficient, and inclusive financing at reduced administrative cost [ 9 , 26 ]. However, there is evidence of opposition from incumbent economic leaders within the banking system to the blockchain transformation in SCF out of fear of being cut-off [ 149 ] or of missing revenue streams [ 101 ]. Other actors are unwilling to share valued information and reluctant to the total transparency provided by blockchain [ 82 , 149 ]. Given that production costs, order quantities and transaction prices are usually perceived as trade secrets, privacy concerns will be a major problem in SCF should visibility be achieved [ 45 ]. Hence, parties that extract information rent are expected to be reluctant to take part in blockchain platforms that decrease information asymmetry.

Saberi et al. [ 120 ] analysed inter-organisational blockchain implementation challenges, alongside intra-organisational, system related, and external to the supply chain challenges. They identified information sharing issues, cultural differences, and challenges in coordination and communication that impede collaboration in supply chains [ 120 ]. Kouhizadeh et al. [ 86 ] detect the complexity of blockchain technology and the need for re-engineering of business processes across the supply chain in an orchestrated manner as the inter-organisational barriers, in addition to the aforementioned confidentiality and security concerns. Korpela et al. [ 85 ] focus on the requirements for the digital supply chain transformation to succeed. Companies must develop their business model to maximise effectiveness in leveraging blockchain in their business offerings and should establish information model platforms to achieve inter-operability and integration among multiple internal platforms of various organisations [ 85 ]. As discussed in supply chain collaboration literature based on EDI, CPFR, and RFID technologies [ 50 , 114 , 122 ], the industry must develop standards which would enable business-to-business (B2B) process connectivity so that members in SCF transactions can exchange original documents and conduct transactions online [ 147 ]. Lastly, integration channel intermediaries, similar to EDI or SWIFT operators, are needed to reconcile data formats and distribute information across the various blockchain systems of independent organisations [ 85 ]. In this regard, several industrial projects (e.g. TradeFinex and Digital Trade Standards Initiative in Table 3 ) explicitly refer to the need for standardisation as a prerequisite to utilise blockchain in SCF.

4.3.2 Managerial implementation challenges

Despite that blockchain provides for networked applications across an ecosystem of companies, with no single party controlling the application [ 142 ], to ensure that a company’s systems are compatible with blockchain SCF platforms requires surmounting some managerial challenges. Batwa and Norrman [ 15 ] discovered that the lack of acceptance in the industry, lack of technological maturity, and the need for collaboration and coordination among competing parties are the main obstacles for blockchain integration in SCF processes. Likewise, Queiroz and Fosso Wamba [ 115 ] discuss implementation challenges through the prism of technology acceptance models in order to understand the individual behaviours in IT adoption based on performance expectancy, effort expectancy, facilitating conditions, perceived usefulness, and trust among supply chain actors. Other scholars suggest institutional theory, diffusion of innovations theory [ 118 ], theory of planned behaviour, technology readiness and the classical technology acceptance model [ 80 ] to explain the reasons why a particular organisation adopts a new and disruptive technology [ 86 , 150 , 159 ].

In this context, Iansiti and Lakhani [ 71 ] developed a blockchain applicability model based on how innovative technologies are naturally being adopted. To this end, Wang et al. [ 150 ] propose using sense-making in assisting managerial decision-making, which refers to the process of developing specific assumptions, expectations, and an awareness of the said technology [ 147 ], which then frame the actions of the decision makers towards it [ 99 ]. Wang et al. [ 150 ], thus, focus on managers’ prospective sense-making perspectives and extricate their views on the issues that may negatively influence blockchain diffusion through interviews with 14 supply chain experts. Numerous stakeholders who may develop conflicting objectives would be involved in a blockchain platform. Therefore, cultural hurdles against new innovations, data ownership and intellectual property issues, the lack of standards, costly implementation, security issues and regulatory uncertainties present barriers to blockchain deployment in SCF [ 120 , 159 ]. In this regard, a solution to overcome these challenges has been suggested arguing that government-led initiatives and a paradigm shift toward a more collaborative business model in the industry could convince top management in organisations aboard blockchain SCF platforms [ 150 ].

4.3.3 Technical implementation challenges

Lu and Xu [ 97 ] and Kouhizadeh et al. [ 86 ] discuss technical issues, such as usability, energy consumption, size and bandwidth and throughput latency, while Wang et al. [ 149 ] point out that despite the immutable character of blockchain, hacking is still possible [ 163 ]. In a similar fashion, Kshetri [ 87 ] highlights the technological immaturity of sensor devices, the borderline between the physical and virtual worlds, and the high degree of computerisation that might not be accessible in some parts of the world. Moreover, Babich and Hilary [ 9 ] underline the ‘garbage in, garbage out’ weakness, namely the issue that there might be discrepancies between the information recorded in the blockchain and the physical state due to mistakes or intent. Although IoT is often presented as the solution to the flaw of introducing erroneous data into the blockchain [ 27 ], the technological risks of the system are not sufficiently discussed in the extant literature. For instance, the system is vulnerable to fraudulent activities by malignant actors, who may separate the sensor from the rest of the cargo to automatically trigger the release of an unlawful payment.

4.3.4 Legal implementation challenges

Despite the continuous development and improvement of the technology to achieve digitalisation in SCF, the absence of enabling regulatory and legal frameworks and broadly accepted standards may impede blockchain diffusion in SCF. For example, both Article 3 of the Uniform Commercial Code (UCC) in the US and its ancestor, Article 3 of the English Bills of Exchange Act 1882, apply only to ‘written’ bills of exchange and promissory notes, thereby not covering bills of exchange, promissory notes, and other negotiable instruments or payment commitments that are in digital form and registered via blockchain in SCF [ 116 ]. Similarly, the market practice in international trade is currently dependent on paper negotiable bills of lading and other paper documents of title [ 138 ] as there is uncertainty regarding the legal value of digitally issued documents of title [ 57 ].

Other legal issues relate to the legal enforceability of smart contracts and to the legal liabilities of decentralised blockchain platforms, with respect to whom is responsibility attributable for platform-related risks, such as system malfunctions, leakage of sensitive information, insuring against risks and non-compliance with regulations, including data protection regulations [ 41 ]. Further legal issues that need to be addressed include the legal status of blockchain records and the issue of synchronicity between the state of the blockchain and the legal status, which might be different due to the occurrence of fraud or incapacitation [ 125 ]. The situation is further complicated as blockchain-driven SCF operates worldwide, which requires numerous parties to comply with different national laws, regulations, and institutions [ 61 ].

Current solutions rely on private legal frameworks established through multipartite agreements-contracts to establish rights and liabilities [ 57 ]. However, without coherency and unification, the market is vulnerable to fragmentation. Hence, the adoption of a stable legal environment is imperative for blockchain-based trade and supply chain finance to succeed [ 15 , 150 ]. Even though the SCM literature does take into account legal considerations in abstract, as a general factor that impedes blockchain adoption in SCF [ 86 , 150 ], there is limited in-depth consideration of the specific legal issues that arise and affect the feasibility of each theoretical proposition.

4.4 Critique and future avenues of research

Building on the proposition of Saberi et al. [ 120 ] that supply chain governance mechanisms must be further evaluated for effectiveness in understanding blockchain-based supply chains, it is argued herein that future research should integrate some overlooked analytical frameworks and employ empirical methods as well as mathematical modelling in order to investigate blockchain implementation challenges further and propose solutions.

4.4.1 Global supply chain management

According to the idealised view of supply chain management, supply chains are perceived as networks of organisations that collaborate together to produce competitive advantage [ 37 ]. However, firms might get stuck in long-term adversarial relationships with their suppliers, making them susceptible to opportunistic behaviour due to information asymmetry [ 83 ]. As discussed above, blockchain promises to address this issue by ensuring trust through immutability of records and transparency. However, this necessitates the participation of the stakeholders in the first place. Mechanisms for incentivising blockchain participation remains a major strategic challenge and an open research question [ 124 ]. Therefore, further theoretical development is needed to understand the conditions for the establishment of blockchain-based SCF networks.

4.4.2 Platform theory and strategic management

We suggest that blockchain SCF networks may be conceptualised as ecosystem platforms [ 76 ], which consist of members that are themselves other organisations and operate as evolving organisations or meta-organisations [ 3 ] that shift along a continuum of different innovation configurations [ 53 ]. This means that potential innovators of complementary products can utilise Application Programming Interfaces (APIs), to build compatible complements [ 40 ]. As Google or Facebook have developed and shared APIs to encourage independent software developers to build applications [ 53 ], blockchain platforms can provide the necessary open APIs in the form of flexible script code system to encourage participants to code smart-contracts and offer innovative payment and financing solutions [ 93 ]. For instance, companies may promote Tradelens and create complementary services, such as smart contracts and other decentralised SCF applications, on top of its platform for their clients. This may enable new SCF channels, such as an open market for financing of invoices [ 47 ]. To this end, Choi [ 36 ] reported new blockchain-enabled SCF solutions in which participants conduct transactions peer-to-peer using cryptocurrency and concluded that these solutions can yield higher expected profits and lower level of operational risk compared to existing SCF techniques.

4.4.3 Co-opetition strategy

The current debate regarding the appropriate strategies and operational practices for the use of blockchain in SCF can be improved by drawing on the co-opetition strategy that combines competition and cooperation to leverage on the shared resources [ 18 , 154 ]. As we have seen in Table 3 , most of the projects trying to leverage blockchain technology within the financial supply chain sphere are essentially consortia. Being a network-based endeavour, blockchain technology is facilitating cooperation between competitors. In this regard, a V-form organisational structure has been suggested as ‘an outsourced, vertically integrated organisation’ tied together by blockchain [ 5 ]. This form of organisation is comprised of an ecosystem of fully independent companies which coordinate and audit their activities through DLT [ 41 , 79 ]. Future research could focus on the notion of co-opetition with a view of determining the organisational conditions under which a blockchain SCF network is feasible and stable. Game theoretical network formation models [ 75 ] provide an analytical framework for such an endeavour, and can help identify SCF methods, market structure, and economic conditions under which blockchain-based SCF can be established.

4.4.4 Legal analysis

Another promising direction of research is the articulation of the legal implementation challenges, which is already underway by one of the authors. For instance, the lack of a sufficient legislative and regulatory framework for blockchain alternatives to paper trade documentation begets a risk of a legal void surrounding the use of blockchain SCF platforms. The key legal issues raised by the development and the use of blockchain records operating on global trade platforms need to be explored by legal scholars in order to establish how would the legislative and regulatory environment need to change to ensure legal enforceability of blockchain-based SCF solutions.

4.4.5 Information systems and empirical analysis

Further studies could investigate the underlying technology in more depth. For example, a comparative study regarding the appropriateness of different blockchains of the same type (e.g. Hyperledger Fabric and Corda) for SCF would be an important contribution. Currently, most academic studies investigate blockchain and SCF by utilising either conceptual or simulation methods. Future studies should consider more mathematical modelling and empirical studies to develop an analytical understanding of the key factors that drive the relationships between different types of flows and stakeholders with conflicting interests acting on networked systems. For instance, there has been little empirical investigation into the blockchain impact on terms of return on investment and realised customer value [ 143 ] or on its impact on critical supply chain properties, such as network risk and resilience.

4.5 Limitations

Finally, a few limitations of this literature review need to be considered. First, this review focuses on the impact of blockchain technology on SCF. The authors acknowledge that the choice of keywords might have excluded some relevant blockchain articles. Here, we aimed to provide a concise discussion of the implications of blockchain in trade and supply chain finance, while a comprehensive discussion on the broader benefits and challenges of blockchain for SCM is beyond the scope of this article and has been provided elsewhere [ 27 , 113 , 115 , 149 ]. Second, most industrial projects are at their early stages; hence, there is limited empirical data on the results of these projects. Thus, the conclusions have to be drawn from the analysis of the projects based on restricted information in the public domain as well as theoretical discussions in the literature. Third, the academic literature on blockchain-enabled SCF is in its infancy and the publications are dispersed over journals in various fields and topics. This review provides a starting point for future studies that may quantify the significance of the various implementation challenges, identify causal relationships among them, and suggest possible solutions to effectively manage blockchain adoption in trade and supply chain finance.

5 Conclusions

The current pandemic has made clear that digitalisation and platform-enabled change is the only way forward for international commerce [ 106 , 126 ]. It forced corporations and banks to digitalise their operations, seek digital alternatives to wet-ink documentation and understand the inefficiencies of the existing internet solutions and internal systems [ 72 ]. This crisis might evolve into an opportunity for the industry to acknowledge the need for creative technology solutions, and to invest in and embrace blockchain resources toward digitalisation [ 73 ].

This review contributes to the SCF literature by articulating the rationale behind blockchain adoption. It has enriched this emerging field by discussing several theoretical studies and industry blockchain applications. This paper is one of the first to consolidate the state-of-the-art of blockchain applications in trade and supply chain financing. By elucidating the current perspectives in academia and practice, the areas where blockchain may bring value to trade and supply chain finance have been identified. This review sets out to explore how blockchain technology may transform SCF by exploring the answers to three research questions.

The first research question (RQ1) concerned the key barriers and pain points that hold back innovation in existing SCF processes and contribute to the growing financing gap of international commerce. Our literature review found that the lack of visibility into supply chain material flows, the inefficient manual processes, the paper-based documentation, the burden of compliance with regulations, and the risk of fraud are the main bottlenecks in existing SCF processes. The second research question (RQ2) probed how blockchain combined with related technologies, such as smart-contracts and IoT, can provide solutions to these inefficiencies. Via an analysis of the academic literature, grey literature, and blockchain use cases, the expected gains from blockchain adoption in trade and supply chain finance were identified to include the provision of end-to-end supply chain visibility, the increased operational efficiencies, the reduced transaction and regulatory costs and the mitigation of fraud-related risks. Our review allowed us to further capture several blockchain implementation challenges in SCF at the frontier of practice, ranging from business and managerial implementation challenges to technical and regulatory issues, which were the focus of RQ3. On this question the research attempted to introduce a novel viewpoint in the discussion, suggesting that future academic literature can examine blockchain adoption challenges in SCF through game theoretical models and using the concept of co-opetition, which is tailored to blockchain platforms wherein many competing companies participate and collaborate.

To our knowledge, this study is one of the very few to have contemplated the implementation challenges for blockchain adoption in SCF. It brings valuable insights about SCF and blockchain, thus placing a foundation to motivate further cross-disciplinary research on this emerging technology and range of financing solutions. It will also help practitioners to further understand where and how blockchain may revolutionise SCF processes and stimulate managers to develop strategies and employ the necessary changes that are required for blockchain-driven SCF to succeed. Considering the nascent nature of the technology, regulators can either instigate and mould the development of blockchain-based SCF solutions through pro-innovation policies and regulations or constrain their impact by strict over-regulation. Therefore, understanding how to regulate blockchain-based projects presupposes an analysis of its novel use-cases [ 41 ]. Our review provides such an analysis of blockchain-based solutions in trade and supply chain financing, along with a state-of-the-art examination of the theoretical solutions, thus enhances the ability of the regulators to identify further legal issues that might emerge and design laws and mechanisms that will facilitate innovation.

Availability of data and material

Not applicable.

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We would like to thank Prof. Miriam Goldby whose detailed comments and constructive feedback on an earlier draft helped improve and clarify this manuscript. All errors remain our own

This study was supported by the Economic and Social Research Council (Grant no. ES/P000703/1).

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APPENDIX: Materials and methods

Considering the rapidly evolving nature of blockchain technology and the paucity of publicly available results on the implementation of blockchain-supported SCF, we have used critical literature review methodology to be able to generate new perspectives [ 140 ]. To conduct a transparent and reproducible critical literature review, the process suggested by Torraco [ 140 ] and Snyder [ 128 ] has been adopted, which was extended by some elements of the PRISMA statement (see Fig. 1 ).

figure 1

Procedural steps of the search protocol for the academic literature, Source: Moher et al. [ 102 ]

The review covers the state-of-the-art use of blockchain in SCF in the past five years, 2016 to 2020. Primary data is collected through a systematic search and review of the literature [ 59 ], while additional data is collected from grey literature. To avoid biases stemming from omitted literature, the articles were located through keyword search in the core collection of Web of Science of terms related to SCF, trade finance, and more generally, supply chain and international trade. Considering the inter-disciplinary nature of the topic and the diversity of the outlets, no constraints were imposed on specific fields or journals. Additional papers were identified through the bibliography of the relevant articles found by the initial keyword search. Finally, the so-called ‘grey literature’ and reports commissioned by public institutions were also examined to capture the current state of industrial applications, which were located through searches in Google and Google Scholar, supplemented by insights gained by attending several industry events and virtual presentations organised by the International Chamber of Commerce (ICC), the World Trade Organisation (WTO), the International Trade and Forfaiting Association (ITFA), the Bankers Association for Finance and Trade (BAFT) and other organisations and industry associations over the summer 2020, in which market leaders discussed their current efforts.

1.1 A.1 Keyword selection

A research protocol was created to search for all relevant papers on the topic and closely related areas. The terms used in the final selection were determined after some pilot searches, where multiple possible combinations of search strings and keywords were tested. After this iterative trial and error process, the search protocol was formulated as shown in Table 5 .

As our topic consists of three elements (i.e. blockchain technology, supply chain, and finance), three groups of search terms were included to ensure that all three aspects are fully captured. We included not only the term blockchain in the first group, but also related concepts, such as Distributed Ledger Technology (DLT) or smart contracts, which are sometimes used interchangeably. To narrow down the scope to supply chain processes and international trade transactions, the second group consisted of supply chain and platform-related terms, including keywords such as ‘supply chain’, ‘trade’ and ‘ecosystem’. As the majority of these keywords can be applied in different themes, they were combined with a third string of keywords consisting of finance-related terms. That way, the second group should always be related with both blockchain technology (first group) and financial perspectives (third group). Specific SCF solutions, ‘factoring’, ‘forfaiting’, ‘discounting’, ‘receivables’ and ‘payables’, as discussed in Sect.  2 , were also included among the finance related terms. Finally, main trade finance methods and payment mechanisms used in international trade transactions, such as ‘letter of credit’, ‘open account’ and ‘bank payment obligation’, were added. This literature could not be neglected in the present review, because trade finance is not only highly related [ 54 , 160 ] but it also partially overlaps with the concept of SCF [ 21 , 84 ]. Consequently, these keywords were searched for in the scientific article titles, abstracts, author’s keywords, and the keywords-plus field.

1.2 A.2 Article selection criteria and process

After employing the above-mentioned research protocol, 493 studies were returned by the keyword search. Specific exclusion criteria were then applied to identify the directly relevant articles. Articles that were written in any language other than English, editorials, calls for papers, book reviews, articles with missing abstracts, and preliminary studies were excluded to ensure transparency, validity, and academic rigour [ 128 ]. Moreover, articles for which the focus fell fully under disciplines other than economics, finance, law, and business and management, e.g. computer science or electrical engineering, were removed. In addition to peer-reviewed academic journals, the search included the proceedings of leading international conferences. Furthermore, certain popular books and book chapters on blockchain, such as Chuen and Deng [ 38 ], De Filippi and Wright [ 69 ], Hacker et al. [ 41 ], Hofmann et al. [ 61 ] were included to better understand how blockchain is framed within the popular literature. Consequently, 161 studies were obtained.

Following the guidelines of Snyder [ 128 ], the literature review can be conducted in phases by reading abstracts first, making selections, and then reading full-text articles, before making the ultimate selection. Papers that discuss mainly different topics, e.g. cryptocurrency markets and Bitcoin’s price fluctuations, or that focus solely on specific sectors, e.g. use of blockchain in healthcare were discarded. As illustrated in Fig. 1 , 51 research papers were retrieved and downloaded.

A full text analysis for finer selection of the candidate papers was employed to align the content of the selected papers with the focus of the review. Twenty-two papers were removed from the poll as they were not directly associated with blockchain implementations in SCF. Publications that discussed features of blockchain that support explicitly SCF received further scrutiny pursuant to their relevance, quality and academic rigour. Ultimately, the selected corpus of core publications consisted of 13 records, which are summarised in Table  2 and discussed in Sects. 3 and 4 of the main text.

As academic studies tend to fall behind the practical implementation of technological innovations, relying merely on academic literature would give a rather constringed view of the topic, especially considering the industry is teeming with blockchain projects. Therefore, the above list is supplemented by a desk-based research on blockchain-supported projects and an analysis of documents beyond academic publishing, such as industry-produced research, to provide a solid overview for understanding how blockchain technology is practically being used in SCF. This led to the identification of the 16 blockchain-based SCF projects discussed in the paper.

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Ioannou, I., Demirel, G. Blockchain and supply chain finance: a critical literature review at the intersection of operations, finance and law. J BANK FINANC TECHNOL 6 , 83–107 (2022).

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How the Blockchain Will Impact the Financial Sector

November 16, 2018 • 14 min read.

The blockchain, a form of distributed ledger technology, has the potential to transform the financial sector by bringing lower costs, faster execution of transactions, improved transparency, auditability of operations and other benefits.

blockchain in finance services or fintech research paper

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Cryptocurrencies and their underlying blockchain technology are being touted as the next-big-thing after the creation of the internet. One area where these technologies are likely to have a major impact is the financial sector. The blockchain, as a form of distributed ledger technology (DLT), has the potential to transform well-established financial institutions and bring lower costs, faster execution of transactions, improved transparency, auditability of operations, and other benefits. Cryptocurrencies hold the promise of a new native digital asset class without a central authority.

So what do these technological developments mean for the various players in the sector and end users? “Blockchains have the potential to displace any business activity built on transactions occurring on traditional corporate databases, which is what underlies nearly every financial service function. Any financial operation that has low transparency and limited traceability is vulnerable to disruption by blockchain applications. DLT is therefore both a great opportunity and also a disruptive threat,” according to Bruce Weber, dean of Lerner College and business administration professor, and Andrew Novocin, professor of electrical and computer engineering, both at the University of Delaware.

Earlier this year, Weber, Novocin, and graduate student Jonathan Wood conducted a literature review on cryptocurrencies and DLT for the SWIFT Institute. Based on this review, the SWIFT institute recently issued a grant to conduct new research on DLT and cryptocurrencies in the financial sector. Weber and Novocin noted that just as disruptors like Amazon, Google, Facebook and Uber built software platforms and thriving businesses thanks to the connectivity provided by internet standards, next-generation startups will build new services and businesses with blockchains. “Many pundits expect blockchain, as a distributed technology, to become the foundation for new services and applications that have completely different rules from those running on hierarchical and controlled databases. Cryptocurrencies are an early example but many others will follow,” they added.

The Value of the Blockchain in the Financial Industry

Kartik Hosanagar, a Wharton professor of marketing and operations, information and decisions, pointed out that the financial services sector is full of intermediaries such as banks that help create trust among transacting parties like lenders and borrowers. Blockchain, he said, is a mechanism to create trust without centralized control. “The power of eliminating intermediaries is the ability to lower transaction costs and take back control from powerful financial intermediaries.”

Regarding cryptocurrencies, Hosanagar pointed out that most of the value today is tied to speculative buying rather than actual use cases. But having a currency without a central authority offers “certain unique kinds of protections especially in countries with troubled central banks.” For example, Venezuela’s currency is rapidly losing value. For people who stored their savings in crypto, there was greater protection against such rapid currency devaluations. “Of course, cryptocurrencies have their own instabilities, but they aren’t tied to actions by central banks and that’s particularly relevant in countries and economies where citizens don’t trust their governments and central banks,” he said.

“Any financial operation that has low transparency and limited traceability is vulnerable to disruption by blockchain applications.” –Bruce Weber and Andrew Novocin

Hosanagar expects the first wave of applications to be rolled out in “private” blockchains where a central authority such as a financial institution and its partners are the only ones with the permission to participate (as opposed to public, permissionless blockchains where participants are anonymous and there is no central authority). Applications in the private blockchains, he said, will be more secure and will offer some of the benefits of decentralized ledgers but will not be radically different from the way things work at present. However, over time, he expects smart contracts (self-executing contracts when requirements are met) to be offered on public blockchain networks like Ethereum. “When securities are traded, intermediaries provide trust, and they charge commissions. Blockchains can help provide such trust in a low-cost manner. But trade of securities is governed by securities laws. Smart contracts offer a way to ensure compliance with the laws. They have great potential because of their ability to reduce costs while being compliant,” says Hosanagar.

According to Weber and Novocin, one area ripe for transformation is reaching consensus on important benchmark rates and prices. At present, they point out, different proprietary indexes are used to determine interest rates and the price of many mainstream assets. Blockchain can transform this. “Think of the London Interbank Offered Rate (LIBOR) and the recent scandals involving manipulation of benchmark values when they are controlled by a single entity that may not be capable of detecting false or fraudulent data. Blockchain could provide greater transparency around the process of creating agreed upon reference prices, and allow more people to participate in the consensus process.”

Weber and Novocin expect that in some areas intermediaries will find their roles reduced as blockchain allows for automation through greater transparency and traceability. In other areas, intermediaries will find themselves well-placed to take advantage of changing needs of their clients, as firms will need help to manage the shift to new standards as well as the greater complexity of open and traceable blockchain infrastructure. Intermediaries in areas that could potentially be disrupted, they said, “should get involved with projects seeking to set the standards, so that they can stay informed and position themselves to profit from becoming the leaders in the operations of the new markets that will emerge.”

Kevin Werbach, Wharton professor of legal studies and business ethics, and author of a forthcoming book The Blockchain and the New Architecture of Trust ,  said that it’s usually not helpful to focus on what aspects of a major existing market will be “transformed” or “disrupted” by new technologies. Important technologies, he said, are far more likely to be integrated into the system than replace it. According to Werbach, while some firms will fail to make the transition and some new ones will take hold, “over the long-run, virtually every historic innovation that eliminated some forms of intermediation also created new forms.”

Blockchain will reduce the massive duplication of information that creates delays, conflicts and confusion in many aspects of financial services, Werbach added. For example, when a syndicate of lenders participates in a loan, having one shared ledger means they don’t all need to keep track of it independently. International payments and corporate stock records are other examples where there are huge inefficiencies due to duplicate record-keeping and intermediaries. “End users won’t see the changes in the deep plumbing of financial services, but it will allow new service providers to emerge and new products to be offered,” said Werbach.

Using Blockchain in Finance: Bumps Along the Way

Angela Walch, professor of law at St. Mary’s University School of Law and a research fellow at the Centre for Blockchain Technologies at University College London, offered another perspective. She said there is a lot of excitement about blockchain as a distributed ledger technology for the financial sector because many believe that it offers a better, more efficient and more resilient form of recordkeeping. However, making use of the blockchain is not as simple as just buying new software and running it. “Blockchain technology is, at core, group recordkeeping. To reap its full benefits, one needs all the relevant members of the group to join the system. This requires collaboration with and across businesses, which is a potentially big hurdle, and may be the hurdle that most limits adoption.”

Governance is the biggest challenge in decentralized organizations, said Weber and Novocin. Members participating in a blockchain-supported financial function may have misaligned incentives, and can end up in gridlock, or with a chaotic outcome. They cite the example of the ‘DAO Hack,’ which was the first prominent smart contract project on the Ethereum network to suffer a large loss of funds. The Ethereum community voted to conduct a hard fork (a radical change to the protocol that makes previously invalid blocks/transactions valid or vice-versa) — reversing the transactions after the hack and essentially refunding the DAO investors. This was in effect a breach of Ethereum’s immutability and it left a sizeable minority of the community bitterly dissatisfied. This group viewed the Ethereum community as forsaking its commitment to immutable, permanent records. They refused to acknowledge the hard fork, and maintained the original Ethereum blockchain, now known as Ethereum Classic (whereas the forked version supported by the Ethereum Foundation is simply Ethereum).

“The power of eliminating intermediaries is the ability to lower transaction costs and take back control from powerful financial intermediaries.” –Kartik Hosanagar

“Distributed organizations serving an open community need to take care to design their governance systems, incentive structures and decision-making processes to create consensus without unduly slowing down the decision-making,” said Weber and Novocin. “Scenario planning or war gaming are worth exploring at the beginning of blockchain projects. Forward planning enables organizations to swiftly respond in a predictable way that is supportive of stakeholders. Publicizing these plans in advance can also build trust and user confidence.”

Cryptocurrency Risks

Werbach listed a variety of risks and vulnerabilities related to cryptocurrencies: Bitcoin has shown that the fundamental security of its proof-of-work system is sound, but it has major limitations such as limited scalability, massive energy usage and concentration of mining pools. There has been massive theft of cryptocurrencies from the centralized intermediaries that most people use to hold it, and massive fraud by promoters of initial coin offerings and other schemes. Manipulation is widespread on lightly-regulated cryptocurrency exchanges.

For example, roughly half of Bitcoin transactions are with Tether, a “stablecoin” that claims to be backed by U.S. dollars but has never been audited and is involved in highly suspicious behavior. Money laundering and other criminal activity is a serious problem if transactions do not require some check of real-world identities. “There are major efforts to address all of these risks and vulnerabilities. Some are technical, some are business opportunities, and some are regulatory questions. There must be recognition among cryptocurrency proponents that maturation of the industry will require cooperation in many cases with incumbents and regulators,” added Werbach.

Hosanagar cautions that while decentralization offers significant value — and a significant number of miners/validators must verify the transaction for it to be validated — it is still susceptible to collusion. If one or a few companies running lots of miners/validators in a small network collude, they can affect the sanctity of the network. The big risk with cryptocurrencies, he added, is that most activity as of today is ultimately tied to speculation. It’s important for cryptocurrencies to discover a “killer app soon so there is some underlying value created beyond speculation of its future value,” Hosanagar concludes.

The Way Ahead?

Given all these challenges, what is the current mindset in the financial sector towards adopting these new technologies? And, importantly, should one push for wide acceptance and deployment, or is there need for them to stabilize first?

According to Werbach, “It’s not an either-or” choice. Cryptocurrencies and blockchain technology in general, he noted, are immature currently. However, there are some areas where they are already able to be deployed effectively. The best way to work through today’s problems, is “to build working systems and see where difficulties arise,” Werbach said. Looking ahead, integration with law, regulation and governance will be critical. Blockchain and cryptocurrencies represent a new form of trust, he added. They will only succeed if they become sufficiently trustworthy, beyond the basic security of the distributed ledgers. “Law, regulation and governance are three major mechanisms to produce trustworthy systems that scale up to society-wide adoption. We need to find ways to address the legitimate concerns of governments without overly restricting the innovations that blockchain technology enables. I’m optimistic about that process over time.”

“We need to find ways to address the legitimate concerns of governments without overly restricting the innovations that blockchain technology enables.” –Kevin Werbach

Walch noted that while there are claims that some consortia are putting ‘blockchain’ systems into production, in many cases it appears that what they are calling a blockchain bears little to no resemblance to the original blockchain technology behind Bitcoin. In many instances, she said, existing shared databases are being called ‘blockchain’ for marketing purposes. “If people do use something they call DLT or blockchain technology in important financial systems, my hope is that they make the decision based on actual capabilities of the tech rather than its widely hyped and generally overstated capabilities,” Walch said. “Permissioned blockchains, which are the variation most likely to be used for financial systems recordkeeping, are very different from public blockchains like Bitcoin or Ethereum. I hope that a more modest and accurate understanding of the actual characteristics of permissioned blockchains sinks in before they are widely adopted.”

Regarding cryptocurrencies or cryptoassets, Walch said that the financial sector’s interest is “less about recordkeeping and more about a new financial asset that it can make money off of.” She pointed out that at present there is no clarity on how power and accountability work in these systems. The ongoing operation of crypto systems and the value they embed and support is reliant on the competence of, and ethical behavior by, unaccountable software developers and validators. “The financial sector believes it understands and can manage the risks of cryptoassets, but I am less certain and worry that hubris and greed are driving the push to create cryptoassets as a real asset class. This has been a bad mixture in the past,” says Walch. “I think it would be more responsible to let cryptosystems exist on their own for a while longer to let more of the kinks get worked out — if they can be; I’m not sure the governance ones can — rather than to rapidly integrate them into the financial system as we seem to be doing.”

“I … worry that hubris and greed are driving the push to create cryptoassets as a real asset class.” –Angela Walch

Conversely, Weber and Novocin feel that the financial industry is cautious about the new DLT technology. According to them, to build confidence in new blockchain systems there needs to be transparency around how the processes work and what the benefits are, and in order to secure adoption, they need to be straightforward to use. “Pundits have drawn parallels to the open source Linux operating system. Although only a few individuals use Linux directly, it quietly runs the vast majority of servers and cloud processors across the world. Similarly, early adoption of blockchain will likely happen in the background of business processes. Companies should get involved now, even if it is just to experiment with the concepts. By gaining familiarity with these new tools, they will be ready as the space continues to develop.”

Weber and Novocin expect that in the next few years, many more businesses will implement private blockchains to improve the transparency and traceability of their financial operations, supply chains, inventory management systems and other internal business systems. Clearer standards will be adopted and a few high-profile projects will emerge. Meanwhile, they said, R&D will continue among the many decentralized blockchain projects to invent more scalable public ledgers whether it be blockchain, Tangle, Hashgraph or something new. “Work is needed on better and more efficient consensus models, whether it be a new form of proof-of-stake or proof-of-work, or something else. There are many established groups, startups, companies and research teams that organizations can join, partner with, or support in order to contribute to research and expand their capabilities.”

This article is part of an editorial collaboration between Knowledge at Wharton and the  SWIFT Institute . 

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From ripples to waves: The transformational power of tokenizing assets

Tokenization, the process of creating a unique digital representation of an asset on a blockchain network, has reached a tipping point after many years of promise and experimentation. The benefits—including programmability, composability, and enhanced transparency—can empower financial institutions to capture operational efficiencies, increase liquidity, and create new revenue opportunities through innovative use cases. These benefits are being realized today, with the first at-scale applications transacting trillions of dollars of assets on-chain per month . However, there have been many false starts and challenges thus far. Further integration of these technologies into the mainstream in a robust, secure, and compliant manner will require cooperation and alignment among all involved stakeholders. As infrastructure players pivot away from proofs of concept to robust scaled solutions, many opportunities and challenges remain to reimagine how the future of financial services will work (see sidebar, “What is tokenization?”).

What is tokenization?

Tokenization is the process of issuing a unique digital representation of an asset on a blockchain, which is a type of distributed ledger. This digital representation is the “token,” which can be invested, exchanged, or pledged (for example, used as collateral). Tokens can represent a broad range of assets, including physical assets such as real estate or art; financial assets such as equities or bonds; intangible assets such as intellectual property; and even identity and unstructured data.

Tokenization effectively creates a large, universally available digital vault in which assets reside and never leave, but whose ownership can be transferred and tracked with total fidelity. Tokenizing assets on a blockchain has many benefits over existing disparate and siloed centralized ledgers. These include increased operational efficiency (for instance, reduced reconciliation needs and errors), composability (the ability to interact with other assets and applications on the network), and programmability (the ability to embed code in the token and its capacity to engage with smart contracts, enabling higher degrees of automation). Tokenizing creates new possibilities along the value chain for financial institutions engaging with the new financial market infrastructure (FMI), potentially unlocking cost savings, net new revenues, or opportunities to reduce risk across asset classes.

One recent prominent example of tokenization is the increasing adoption of tokenized money market funds, which surpassed $1 billion in total value in Q1 2024. 1 Tokenized Treasuries value from RWA.XYZ, accessed May 20, 2024. Immutable data on the shared ledger reduces data errors associated with manual reconciliation, while 24/7 instant settlement and composability provide better user experience and new revenue sources for FMIs. For example, tokenized money market funds could be used for payments, enhancing capital efficiency for holders. Such products are offered by incumbents BlackRock, WisdomTree, and Franklin Templeton, as well as Web3 natives Ondo Finance, Superstate, and Maple Finance.

If we were to design the future of financial services, we would arguably include many of the features of tokenized digital assets: 24/7 availability; instant global collateral mobility; equitable access; composability, thanks to a common technology stack; and managed transparency. Highlighting the strategic future of this technology, Larry Fink, chairman and CEO of BlackRock, said in January 2024, “We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond […] will be on one general ledger.” 1 “Fink sees financial tokenization of assets as next step,” Bloomberg TV, January 12, 2024. More and more institutions are rolling out and scaling tokenized products, from tokenized bonds and funds to private equity and cash.

The digitization of assets seems even more inevitable now as the technology matures and demonstrates measurable economic benefits. Despite this visible momentum, broad adoption of tokenization is still far away. Modernizing existing infrastructure is challenging, especially in a regulation-heavy industry such as financial services. Overcoming inertia requires coordination across the value chain. Given this, we expect the adoption of tokenization to occur in multiple waves: the first will be driven by use cases with proven return on investment and existing scale. Next will be use cases of asset classes whose current markets are smaller, benefits less apparent, or require solutions to tougher technical challenges.

Based on our analysis, we expect that total tokenized market capitalization could reach around $2 trillion by 2030 (excluding cryptocurrencies like Bitcoin and stablecoins like Tether), driven by adoption in mutual funds, bonds and exchange-traded notes (ETN), loans and securitization, and alternative funds. In a bullish scenario, this value could double to around $4 trillion, but we are less optimistic than previously published estimates as we approach the middle of the decade.

In this article, we provide our perspective of how the adoption of tokenization could play out. We describe the current state of adoption (focused mostly on a limited set of assets), as well as the benefits and feasibility of wider tokenization. We then examine current use cases that take aim at a meaningful market share and provide a rationale for waves of growth across different asset classes. For the remainder of the major financial asset classes, we examine the “cold start” problem and offer practical steps for how it may be overcome. Finally, we consider the risks and benefits for first movers, and consider the “call to action” for all participants in the future of financial market infrastructure.

Tokenization in waves

Tokenization’s rate and timing of adoption will vary across asset classes resulting from differences in expected benefits, feasibility, time to impact, and market participants’ risk appetite. We expect those factors to characterize likely waves of activity and adoption. Asset classes that have larger market value, higher friction along the value chain today, less mature traditional infrastructure, or lower liquidity are more likely to achieve outsize benefit from tokenization. For instance, we believe tokenization feasibility is highest for asset classes with lower technical complexities and regulatory considerations.

The appetite for investing in tokenization likely scales inversely to the richness of fees earned from today’s less efficient processes, depending on whether the functions sit in-house or are outsourced, and how concentrated the main players and their fees are. Outsourced activities often reach economies of scale, reducing the incentives for disruption. Time to impact—that is, how quickly returns on tokenized-related investments can be achieved—can augment the business case and thus the appetite to pursue tokenization.

A given asset class can lay the foundation for adoption of subsequent asset classes by ushering in greater regulatory clarity, infrastructure maturity, interoperability, and accelerated investment. Adoption will also differ by geography, influenced by a dynamic and shifting macroenvironment, including market conditions, regulatory frameworks, and buy-side demand. And finally, high-profile successes or failures could propel or restrict further adoption.

Asset classes with the fastest paths to adoption

Tokenization is progressing at a gradual pace, with acceleration expected as network effects gain momentum. Given their characteristics, certain asset classes will likely be faster to reach meaningful adoption—defined as more than $100 billion of tokenized market capitalization—by the end of the decade. We expect the most prominent front-runners will include cash and deposits, bonds and ETNs, mutual funds and exchange-traded funds (ETFs), as well as loans and securitization. For many of these, adoption rates are already material, underpinned by greater efficiency and value gains from blockchain along with higher technical and regulatory feasibility.

We estimate that the tokenized market capitalization across asset classes could reach about $2 trillion by 2030 (excluding cryptocurrencies and stablecoins), driven mainly by the above assets (Exhibit 1). The pessimistic and optimistic scenarios range from about $1 trillion to about $4 trillion, respectively. Our estimate is exclusive of stablecoins, including tokenized deposits, wholesale stablecoins, and central bank digital currencies (CBDCs) to avoid double counting, as these are often used as the corresponding cash legs in the settlement of trades involving tokenized assets.

Mutual funds

Tokenized money market funds have attracted over $1 billion in assets under management, signaling demand from investors with on-chain capital in a high-interest-rate environment. Investors can choose from funds managed by established incumbents, such as BlackRock, WisdomTree, and Franklin Templeton, as well as Web3 natives such as Ondo Finance, Superstate, and Maple Finance. Tokenized money market funds will likely see sustained demand in a higher-interest-rate environment, potentially offsetting stablecoins as on-chain stores of value. Other types of mutual funds and ETFs could offer on-chain capital diversification to conventional financial instruments.

The transition to on-chain funds can substantially increase utility, including instant 24/7 settlement and the ability to use tokenized funds as payment vehicles. As the scope and magnitude of tokenized funds grow, additional product-related and operations benefits will materialize. For instance, highly tailored investment strategies would become possible through composability across hundreds of tokenized assets. Having data on a shared ledger reduces errors associated with manual reconciliation, and increases transparency, leading to lower operational and technology costs. While the overall demand for tokenized money market funds partially depends on the interest rate environment, it now acts as the early green shoots of traction for other funds. 2 Dagmar Chiella, “U.S. money market funds reach $6.4 trillion at end of 2023,” Office of Financial Research, March 26, 2024.

Loans and securitization

Blockchain-enabled lending is nascent, but disruptors are starting to see success in this space: Figure Technologies is one of the largest nonbank home equity line of credit (HELOC) lenders in the United States, with billions in origination volumes. Web3 natives such as Centrifuge and Maple Finance, together with Figure and others, have facilitated the issuance of over $10 billion of loans involving blockchains. 3 Tokenized private credit value from RWA.XYZ, accessed May 20, 2024.

We expect to see more adoption of tokenization for lending, especially with warehouse lending and securitizing on-chain loans. Conventional lending is characterized by labor-intensive processes and high levels of intermediary involvement. Blockchain-enabled lending provides an alternative, with many benefits: live, on-chain data, held in a unified master ledger serving as the single source of truth, fostering transparency and standardization throughout the lending life cycle. Smart-contract-enabled calculations of payouts and streamlined reporting reduce required cost and labor. Shortened settlement cycles and access to a broader capital pool enable faster transaction flow and potentially lower the cost of capital for borrowers.

In the future, tokenizing a borrower’s financial metadata or monitoring their on-chain cash flows could enable fully automated, fairer, and accurate underwriting. As more lending shifts to private credit channels, the incremental cost savings and speed represent attractive benefits for borrowers. Additional demand is expected from Web3 natives, as overall digital asset adoption grows.

Bonds and exchange-traded notes

Globally, over $10 billion worth of tokenized bonds in total notional value have been issued in the last decade (compared with $140 trillion outstanding notional globally). 4 This projection is based on author research derived from public information. Noteworthy recent issuers include Siemens, the City of Lugano, and the World Bank, as well as other corporations, government-related entities, and international organizations. Additionally, blockchain-based repurchase agreements (repos) have found adoption, resulting in trillions of dollars of monthly transaction volume in North America and creating value from operational and capital efficiencies on existing flows.

Digital bond issuance will likely continue given the high potential benefits once scaled, as well as comparably low barriers today, partially driven by an appetite to spur capital market development in certain regions. For example, in Thailand and the Philippines, the issuance of tokenized bonds enabled inclusion of small-ticket investors through fractionalization. 5 Wichit Chantanusornsiri, “PDMO launching cheap bonds via blockchain,” Bangkok Post , June 16, 2020. While benefits so far have been demonstrated mostly for issuance, an end-to-end tokenized bond life cycle could unlock improved operational efficiencies of at least 40 percent through data clarity, automation, embedded compliance (for example, transferability rules encoded at a token level), and streamlined processes (for example, asset servicing). Additionally, lower costs, faster issuance, or fractionalization can improve financing for smaller issuers by enabling “just-in-time” financing (that is, optimizing borrowing costs by raising specific amounts at specific times) and broadening the investor base by tapping into global pools of capital. 

Spotlight on repos

Repurchase agreements, or “repos,” are one example where tokenization adoption and its benefits can be observed today. Broadridge Financial Solutions, Goldman Sachs, and J.P.Morgan currently transact trillions of dollars of repo volume per month. Unlike some tokenization use cases, repos do not require value-chain-wide tokenization to realize material benefits.

Financial institutions that tokenize repos capture primarily operational and capital efficiencies. On the operational side, smart-contract-enabled execution automates daily life cycle management (for example, collateral valuation and margin top-ups). It reduces errors and settlement failures and simplifies reporting; 24/7 instant settlement and on-chain data also improve capital efficiency through intraday liquidity for short-term borrowing and enhanced collateral usage.

Historically, most repo terms were 24 hours or longer. Intraday liquidity can decrease counterparty risks, reduce borrowing costs, enable lending of inert cash for short time increments, and reduce liquidity buffers. Real-time, 24/7, cross-jurisdictional collateral mobility could provide access to higher-yielding, high-quality liquid assets and enable optimized movement of this collateral across market participants, thus maximizing its availability.

Subsequent waves of assets

The first wave of assets described earlier has presented a somewhat independent pathway to adoption today and over the next two to three years. Conversely, tokenizing other asset classes will more likely scale only once the foundation has been laid by preceding asset classes or when a catalyst spurs advancement despite limited evidence for near-term benefits.

One class of assets for which tokenization holds great potential, in the eyes of many market participants, is alternative funds, potentially sparking growth in assets under management and streamlining fund accounting. Smart contracts and interoperable networks can make managing discretionary portfolios at scale more efficient through automated portfolio rebalancing. They may also enable new sources of capital for private assets. Fractionalization and secondary market liquidity may help private funds access new capital from smaller retail and high-net-worth individuals. Additionally, transparent data and automation on a unified master ledger may create operational efficiencies for middle- and back-office activities. There are ongoing experiments from several incumbents, including Apollo and J.P.Morgan, testing what portfolio management on a blockchain could look like. 6 “The Future of Wealth Management,” J.P.Morgan, 2023. To fully realize the benefits of tokenization, however, underlying assets must also be tokenized, and regulatory considerations may limit the obtainable upside.

For several other asset classes, adoption will likely be slower, either because the expected benefits are only incremental or due to feasibility concerns such as satisfying compliance obligations or absence of incentives for adoption for critical market participants (Exhibit 2). These asset classes include publicly traded and unlisted equities, real estate, and precious metals.

Overcoming the cold start problem

A cold start problem is a common challenge to adopting innovation, in which products and their users need to grow at a healthy pace but neither succeeds alone. In the world of tokenized financial assets, issuance is relatively easy and reproducible, yet true scale can be achieved only when network effects are achieved: when users (typically, investors on the demand side) capture real value, whether from cost savings, higher liquidity, or enhanced compliance.

In practice, while there has been traction in proof-of-concept experiments and single-fund launches, token issuers and investors still bump up against a familiar cold start problem: limited liquidity deters issuance due to inadequate transaction volume to establish a robust market; a fear of losing market share may cause first movers to incur additional expense by supporting parallel issuance on legacy technology; and despite considerable benefits, incumbents may experience inertia due to the disruption of established processes (and associated fees).

One such example is the tokenization of bonds. Barely a week goes by without the announcement of a new tokenized bond issuance. While there are billions of dollars of tokenized bonds outstanding today, benefits over traditional issuance are marginal, and secondary trading remains scarce. Here, overcoming the cold start problem would require constructing a use case in which the digital representation of collateral delivers material benefits—including much greater mobility, faster settlement, and more liquidity. Delivering true, sustained long-term value requires coordination across a multifaceted value chain and widespread engagement of participants with the new digital asset class.

Given the complexity of upgrading the underlying operating platform for the financial services industry, we posit that a minimum viable value chain (MVVC) (by asset class) is required to enable the scaling of tokenized solutions and overcome some of its challenges. To fully realize the benefits laid out in this article, financial and partner institutions must cooperate on common or interoperable blockchain networks. This interconnected infrastructure represents a new paradigm and has triggered regulatory concerns and some feasibility challenges (Exhibit 3).

There are several ongoing efforts to build common or interoperable blockchains for institutional financial services, including the Monetary Authority of Singapore’s Project Guardian and the Regulated Settlement Network. In Q1 2024, the Canton Network pilot brought together 15 asset managers, 13 banks, plus multiple custodians, exchanges, and a financial infrastructure provider to perform simulated transactions. 7 “The Canton Network completes the most comprehensive blockchain pilot to date for tokenized real world assets,” Canton, March 12, 2024. This pilot validated that traditionally siloed financial systems can successfully connect and synchronize, utilizing a public-permissioned blockchain while maintaining privacy controls.

While there are successful examples on public and private blockchains, it is unclear which will host the most transaction volume. Currently, in the United States, most federally regulated institutions are discouraged from using public blockchains for tokenization. But globally, many institutions are choosing Ethereum, a public network, for the liquidity and composability it enables. As unified ledgers continue to be built and tested, the public versus private network debate is far from over.

A path forward

Comparing the current state of tokenization of financial assets with the emergence of other paradigm-shifting technologies suggests we are in early stages of adoption. Consumer technologies (such as the internet, smartphones, and social media) and financial innovations (such as credit cards and ETFs) typically exhibit their fastest growth (over 100 percent annually) in the first five years after inception. 8 This percentage is derived from public figures sourced from CoinMarketCap,, Insider Intelligence, ITU, McKinsey Organizational Data Platform, Meta Platforms, Morgan Stanley, ResearchGate, SEC, Statista, Synergy Research Group, The Block. Thereafter, we find annual growth slows to around 50 percent, and ultimately a more modest compound annual growth rate of 10 percent to 15 percent is achieved after ten-plus years. Significant issuance of tokenized assets was not seen until the last few years, even though trials began as early as 2017. Our market capitalization estimates for 2030 assume, on average, a compound annual growth of 75 percent across asset classes, with Wave 1 assets leading the way.

Although it is fair to expect tokenization to spur such a multidecadal transformation of the financial industry, there may be particular benefits for early movers who are able to “catch the wave.” Pioneers can capture oversized market share (especially in markets benefiting from economies of scale), enhance their own efficiency, and set the agenda for formats and standards, as well as benefit from the reputational halo of embracing emerging innovation. Early movers in tokenized cash payments and on-chain repos have demonstrated this.

But many more institutions are in “wait and see” mode, anticipating clearer market signals. Our thesis that the case for tokenization is at a tipping point suggests that this mode may be too slow once we see some important signposts, including the following:

  • infrastructure: blockchain technology able to support trillions of dollars of transaction volume
  • integration: blockchains for different applications demonstrating seamless interconnectivity
  • enablers: widespread availability of tokenized cash (for example, CBDCs, stablecoins, tokenized deposits) for instant settlement of transactions
  • demand: appetite from buy-side participants to invest at scale in on-chain capital products
  • regulation: actions that provide certainty and support a fairer, more transparent, and more efficient financial system across jurisdictions, with clarity on data access and security

While we have yet to see all these markers emerge, we anticipate waves of adoption (with widespread use) to follow the waves of tokenization described earlier. Such adoption will be led by financial institutions and market infrastructure players that assemble to establish leading positions in the capture of value. We call these collaborations minimum viable value chains. Examples of MVVCs are the blockchain-based repo ecosystems operated by Broadridge, and J.P.Morgan’s Onyx with Goldman Sachs and BNY Mellon.

Over the next few years, we anticipate many more MVVCs emerging to capture value from additional use cases, such as instant business-to-business payments via tokenized cash; dynamic “smart” management of on-chain funds by asset managers; or efficient life cycle management of government and corporate bonds. These MVVCs will likely be supported by network platforms created by incumbents and fintech disruptors.

There are risks as well as rewards for early movers: the up-front investment and risks of investing in new technology can be substantial. Not only is there a spotlight on first movers but developing infrastructure coupled with running a parallel process on a legacy platform is time and resource intensive. In addition, in many jurisdictions the regulatory and legal certainty to engage with any form of digital assets is lacking, and critical enablers, such as widespread availability of wholesale tokenized cash and deposits for settlement, have yet to be supplied.

The history of blockchain applications is littered with casualties of such challenges. That history may deter incumbents who may feel more secure following business as usual on legacy platforms. But such a strategy creates risk, including material loss of market share. As today’s high-interest environment has produced clear use cases for some tokenized products such as repos, market conditions have the potential to quickly sway demand. As signposts for the adoption of tokenization emerge, such as regulatory clarity or maturing infrastructure, trillions of dollars of value can move on-chain, creating a sizeable value pool for first movers and disruptors (Exhibit 4).

In the near term, institutions, including banks, asset managers, and market infrastructure players, should assess their product suites and identify which assets would most benefit from transitioning to tokenized products. We suggest questioning whether tokenization can accelerate strategic priorities, such as entering new markets, launching new products, and/or attracting new customers. Are there potential use cases that can create value in the near term? And what internal capabilities or partnerships are required to capitalize on the opportunities created by this shift in the market?

By aligning pain points (on the buy- and sell-sides) with buyers and market conditions, stakeholders can assess where tokenization creates the greatest risk to their market shares. But realizing the full benefits will require assembling counterparties to collaborate in creating a minimal viable value chain. Working through such growing pains now can help incumbent players avoid playing catch-up when demand inevitably surges.

Anutosh Banerjee is a partner in McKinsey’s London office; Julian Sevillano is a partner in the Bay Area office; Matt Higginson  is a partner in the Boston office; and Donat Rigo is a consultant in the New York office, where Garry Spanz is an associate partner.

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  • DOI: 10.54097/cmnbc241
  • Corpus ID: 270609794

Fintech and Digital Transformation of the Financial Industry

  • Xuanhao Liang
  • Published in Highlights in Business… 10 April 2024
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Introduction to fintech: a general financial technology overview.

blockchain in finance services or fintech research paper

Financial Technology, or Fintech, refers to the innovative use of technology in the financial sector. This rapidly evolving field encompasses a wide range of applications, from digital payments to blockchain technology, fundamentally transforming how financial services are delivered and consumed. The fintech industry is expected to continue its exponential growth, with an estimated global market value projected to reach $460 billion by 2025. This article delves into the multifaceted world of fintech, exploring its impact, key trends, regulatory landscape, and future outlook.

The Evolution and Growth of Fintech

Fintech has evolved significantly since its inception, driven by technological advancements and changing consumer preferences. The industry’s growth trajectory has been meteoric, underpinned by the increasing demand for more convenient, efficient, and personalized financial services. Traditional banking models, characterized by physical branches and face-to-face interactions, have been upended by digital-first alternatives. Fintech companies have introduced innovative solutions such as mobile payments, online lending platforms, and robo-advisors, offering unprecedented convenience and accessibility to consumers.

Key Drivers of Fintech Growth

Several factors contribute to the rapid growth of the fintech industry:

1) Consumer Demand : Modern consumers expect seamless, on-demand financial services. The convenience of mobile banking apps, peer-to-peer payment systems, and instant loan approvals has heightened these expectations, pushing traditional financial institutions to innovate or risk obsolescence.

2) Technological Advancements : Advances in artificial intelligence (AI), machine learning (ML), blockchain, and big data analytics have enabled the development of sophisticated fintech solutions. These technologies enhance decision-making, automate routine tasks, and improve security and transparency in financial transactions.

3) Regulatory Support : Governments and regulatory bodies worldwide are increasingly recognizing the potential of fintech and are working to create conducive environments for its growth. Regulatory sandboxes, for instance, allow fintech startups to test their innovations in a controlled setting before full-scale deployment.

4) Investment and Funding : The fintech sector continues to attract substantial investment from venture capitalists, private equity firms, and even traditional banks. This influx of capital is crucial for research, development, and scaling of new technologies and business models.

Disruption and Transformation in Financial Services

Fintech has profoundly disrupted traditional banking and financial services by introducing digital alternatives that are often more efficient and user-friendly. Some of the major areas of disruption include:

1) Mobile Payments and Digital Wallets : Services like PayPal, Venmo, and Apple Pay have revolutionized how people make transactions, shifting from cash and card payments to digital wallets and mobile apps.

2) Online Lending Platforms : Fintech companies like LendingClub and SoFi have democratized access to credit by offering online lending platforms that bypass traditional banks, providing faster and often cheaper loans.

3) Robo-Advisors : Automated investment platforms like Betterment and Wealthfront use algorithms to provide personalized financial advice and portfolio management, making investing more accessible to a broader audience.

4) Cryptocurrencies and Blockchain : Bitcoin and other cryptocurrencies, underpinned by blockchain technology, are challenging conventional notions of currency and financial transactions. Blockchain’s decentralized ledger system promises enhanced security and transparency.

Back-End Innovations in Financial Institutions

In addition to consumer-facing services, fintech is transforming the back-end processes of financial institutions:

1) Automated Processes : AI and ML are being leveraged to automate tasks such as fraud detection, risk assessment, and customer service through chatbots and virtual assistants.

2) Data Analytics : Financial institutions are using big data analytics to gain insights into customer behavior, improve decision-making, and tailor products and services to individual needs.

3) Blockchain for Settlements : Blockchain technology is being explored for its potential to streamline and secure back-end operations, such as clearing and settlement processes in securities trading.

Trends in Fintech

Several trends are shaping the future of fintech:

1) Artificial Intelligence and Machine Learning : AI and ML are central to many fintech innovations. These technologies enable real-time data processing, predictive analytics, and personalized financial products. For example, ML algorithms can analyze vast amounts of data to identify patterns and trends, helping financial institutions make better lending decisions and detect fraudulent activities more effectively.

2) Blockchain Technology : Blockchain’s decentralized nature offers significant advantages in terms of security and transparency. It is being used not only in cryptocurrencies but also in smart contracts, supply chain finance, and cross-border payments. The immutable ledger of blockchain ensures that all transactions are recorded permanently, reducing the risk of fraud and enhancing trust.

3) RegTech : Regulatory technology, or RegTech, refers to the use of technology to help financial institutions comply with regulations efficiently. RegTech solutions automate compliance processes, reduce the risk of human error, and ensure timely adherence to regulatory requirements. This is particularly important in an increasingly complex regulatory environment.

4) Open Banking : Open banking initiatives, driven by regulatory mandates in regions like Europe, encourage financial institutions to open their APIs to third-party developers. This fosters innovation by allowing fintech startups to build new applications and services on top of traditional banking infrastructure, ultimately benefiting consumers with more diverse and competitive offerings.

5) Cybersecurity : As fintech services proliferate, the need for robust cybersecurity measures becomes paramount. Fintech companies are investing heavily in cybersecurity technologies to protect sensitive financial data from cyber threats and ensure the trust and confidence of their customers.

Financial Technology Overview

Regulatory Landscape

The regulatory environment plays a crucial role in the growth and evolution of fintech. Governments around the world are working to balance the need for innovation with consumer protection. Key aspects of the regulatory landscape include:

1) Regulatory Sandboxes : Many countries have established regulatory sandboxes that allow fintech companies to test their innovations in a controlled environment with regulatory oversight. This enables regulators to understand new technologies and business models while ensuring consumer protection.

2) Data Protection and Privacy : With the increasing use of big data in financial services, regulations such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the United States impose strict requirements on data handling and privacy. Fintech companies must navigate these regulations to ensure compliance while delivering innovative services.

3) Anti-Money Laundering (AML) and Know Your Customer (KYC) : Fintech companies are required to implement robust AML and KYC processes to prevent financial crimes. Technologies like AI and blockchain are being used to enhance these processes, making them more efficient and effective.

4) Licensing and Supervision : Fintech companies must often obtain licenses from regulatory authorities to operate legally. This involves meeting specific requirements related to capital adequacy, risk management, and consumer protection. Ongoing supervision ensures that these companies adhere to regulatory standards.

Collaboration Between Fintech and Traditional Financial Institutions

While fintech startups are known for their disruptive potential, many are choosing to collaborate with established financial institutions rather than compete against them. These partnerships offer mutual benefits:

1) Access to Resources : Fintech startups gain access to the vast resources, customer bases, and regulatory expertise of traditional banks, helping them scale their operations more effectively.

2) Innovation and Agility : Established financial institutions benefit from the innovation and agility of fintech companies. By integrating fintech solutions, they can enhance their product offerings, improve customer experiences, and stay competitive in a rapidly changing market.

3) Regulatory Compliance : Collaborating with traditional banks helps fintech companies navigate the complex regulatory landscape more efficiently. Banks’ established compliance frameworks provide a solid foundation for fintech innovations.

Challenges and Future Outlook

Despite the promising future of fintech, several challenges remain:

1) Regulatory Uncertainty : The regulatory landscape for fintech is still evolving, and uncertainty around regulations can pose challenges for companies operating in this space. Clear and consistent regulatory frameworks are essential for fostering innovation and protecting consumers.

2) Cybersecurity Threats : As fintech solutions become more prevalent, they also become attractive targets for cybercriminals. Ensuring robust cybersecurity measures is crucial to protecting sensitive financial data and maintaining customer trust.

3) Financial Inclusion : While fintech has the potential to enhance financial inclusion, there is still a significant portion of the global population that lacks access to basic financial services. Bridging this gap requires targeted efforts and innovative solutions.

4) Competition and Market Saturation : The fintech sector is becoming increasingly competitive, with new startups entering the market regularly. Differentiating oneself in a crowded market and achieving sustainable growth can be challenging.

The fintech industry is poised for continued growth and transformation in the coming years. Driven by technological advancements, changing consumer preferences, and supportive regulatory environments, fintech is reshaping the financial services landscape. From mobile payments and online lending to AI-driven financial products and blockchain-based solutions, fintech innovations are making financial services more accessible, efficient, and personalized.

As the industry evolves, collaboration between fintech startups and traditional financial institutions will be crucial in harnessing the full potential of these technologies. While challenges such as regulatory uncertainty and cybersecurity threats persist, the future of fintech looks promising. With a focus on innovation, inclusivity, and customer-centricity, fintech is set to revolutionize how we interact with financial services, creating a more connected and efficient global financial ecosystem.

In summary, fintech represents a dynamic and rapidly evolving field that is transforming the financial services industry. Its impact is profound, offering new opportunities and challenges alike. As we move forward, the continued growth and evolution of fintech will depend on the ability of industry stakeholders to navigate regulatory complexities, address cybersecurity concerns, and foster innovation through collaboration and investment. The future of fintech is bright, promising a more inclusive, efficient, and secure financial landscape for all.

blockchain in finance services or fintech research paper

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How Blockchain can impact financial services – The overview, challenges and recommendations from expert interviewees

Victor chang.

a School of Computing, Engineering and Digital Technologies, Teesside University, Middlesbrough, UK

Patricia Baudier

b EM Normandie Business School, Métis Lab, Paris, France

c IBSS, Xi'an Jiaotong-Liverpool University, Suzhou, China

Jingqi Zhang

Mitra arami.

d PARDIS Ltd, London, UK

  • • We investigate Blockchain adoption cases in financial services.
  • • We summarize current status of Blockchain practices.
  • • We use interviews to investigate Blockchain adoption.
  • • We identify knowledge-hiding as a main barrier for financial industry.
  • • We make several recommendations and four propositions.

FinTech (Financial Technology) and Blockchain are prevalent topics among technology leaders in finance today. This article describes the impact and revolution of FinTech and Blockchain in the financial industry and demonstrates the main characteristics of such technology. Then, we present three critical challenges as well as three ethical issues about using Blockchain technology. Next, we discuss the development of Blockchain for the financial sector. In addition, we describe the real motivations for banks to explore Blockchain, and problems they face. In order to have a good understanding of the industry, a qualitative method was adopted, and sixteen experts were interviewed. It was identified that knowledge hiding in Blockchain was common and the rationale behind was analyzed using the TPB (Theory of Planned Behavior) approach. The analysis results suggested that knowledge hiding was due to affective, behavioral and cognitive evaluations. The interviewees also provided several recommendations and success factors to overcome current issues in Blockchain adoption. Therefore, four important propositions have been developed. Finally, this article suggests how financial services should respond to this new technology and how to manage knowledge sharing in a more structured way. This article contributes to the literature related to the current entrepreneurial finance landscape for Blockchain.

1. Introduction

The key element of the business is trading, and trading activities are dependent on trust ( Tang, 2018 ). Through financial instruments and strategies, trust can lead to successful businesses. A trust-rating platform is one important part of the finance system and it is used to evaluate whether a user can be trusted. It rates a user based on his or her borrowing and repayment history, credit status, and other information to determine whether to approve the loan or credit limit or discount, etc. For example, Alibaba proposes e-commerce platforms, Alipay and its trust-rating platform. Depending on the trusting scores, customers can get discounts, order goods/services and payback ( Dong et al., 2015 ).

Financial technology, also called FinTech, is the “marriage” between technology and finance. When combining both technology and finance, they have a “chemical reaction” and create a multiplier effect, which is more substantial than the sum of the two together. Zetzsche et al. (2017) point out that the current FinTech stands out from two significant trends. The first trend is the pace of change driven by Big Data, machine learning, commoditization of technology and Artificial Intelligence (AI). The second trend is the fact that more new non-financial firms have entered and invested in financial services businesses. Fintech is a key area in the development of Industry 4.0, since it requires the use and integration of different technologies, such as AI and Data Science, and it also provides a platform as a service and software as a service for Industry 4.0 ( Dhanabalan, and Sathish, 2018 ; Mashelkar, 2018 ).

FinTech can also be understood in two ways, as follows ( Tang, 2018 ). The first dimension is about traditional financial enterprise conducting transformation by using technology. For example, traditional financial enterprises, such as Pingan Group, Industrial and Commercial Bank of China, Morgan Stanley and Goldman Sachs, use big data and other new technologies to upgrade and transform their service. The second dimension is that some technology enterprises try to take advantage of their technologies to develop financial services. For example, the initial aim of Facebook, Apple, Google, Ant Financial (China), Jingdong Finance (China), Tencent (China), was not to involve in the financial transaction. But finally, they decided to develop their own versions of financial services to cover their customer's needs and create new forms of entrepreneurial finance landscape.

FinTech has impacted the traditional financial industry. After the Credit Crisis of 2008, the landscape of the financial sector has changed due to overall financial regulation and financial technology innovation ( Anagnostopoulos, 2018 ; Brem et al., 2017 ). FinTech has three primary breakthrough directions. The first one is mobile payment, such as WeChat payment, Alipay, and Apple Pay. The second is based on "smart contract", including Chinese brands such as “Ant Xiaodai”, “Jingdong Baitiao” and “Huabai”. P2P lending is also considered as part of the smart contact category. The third one, which is particularly popular, is called the Blockchain. The main characteristics of these three major topics of the FinTech industry are instant contact, live data, credit ratings and updates.

The reason why the financial industry is fascinated by Blockchain technology is that the characteristics of the Blockchain allow people to build trust faster and have the potential to change the financial infrastructure ( Pilkington, 2016 ).

However, the development of Blockchain is not mature yet. Some challenges have arisen, such as scalability, security, privacy, latency, etc. It is important for financial markets to have a better understanding of the Blockchain industry and find robust solutions. Therefore, this paper can demonstrate an overview of the Blockchain and its development in the financial industry and investigate challenges for their development of Industry 4.0. During the overview, critical challenges, as well as ethical issues about using Blockchain technology, were identified as well. After the overview, a qualitative method based on sixteen interviews with experts in the Blockchain industry was conducted in order to have a good understanding of the industry. Information from experts was analyzed by the method of the Theory of Planned Behavior. Based on the analysis results and experts' recommendations, three important propositions were developed.

2. Blockchain

2.1. background.

Blockchain has become popular due to the rise of bitcoin. However, this technology is not limited to the financial area. A Blockchain originally means blocks of cryptocurrencies linked by chains. This new concept has received significant attention in FinTech ( Mu, 2016 ). Each block, bound by cryptography, contains a cryptographic hash of the previous block, a timestamp, and transaction data. The first Blockchain was conceptualized by Satoshi Nakamoto in 2008, who used a Hash cash-like method to add blocks to the chain without a trusted third party ( Narayanan et al., 2016 ). Blockchain, a rapidly evolving financial technology, revolutionizes the way people are dealing with businesses ( Antonio and DiNizo, 2018 ).

Blockchain attracts attention as an underlying technology for bitcoin and other cryptocurrencies ( Nguyen, 2016 ) since it is seen as a new foundation for transactions in the world ( Staples et al., 2017 ). A Blockchain is a continuous account database, which is complete, distributed and unalterable ( Yoo, 2017 ). The most excellent value of Blockchain is a decentralized system, whose security chain is very long. The essential advancement is the distributed trust offered by Blockchain technology – (1) removing the trusted third party to facilitate transactions and (2) decreasing the cost of trading and (3) reducing the time ( Staples et al., 2017 ). Thus, Blockchain is expected to set off the industrial and commercial revolution and promote economic reform worldwide ( Underwood, 2016 ). Fig. 1 shows a view of how Blockchain supports the transaction between the two parties. Firstly, Blockchain uses encryption to produce a digital security code. Then the users can validate the transaction without private information. Because the record in the Blockchain is immutable, the transaction will be completed automatedly and distributed. Tapscott and Tapscott (2017) point out the five main principles of the Blockchain: (1) Computational Logic, (2) Peer-to-Peer Transmission, (3) Irreversibility of Records, (4) Distributed Database, (5) Transparency with Pseudonym. Another approach is to use a conceptual framework to integrate important components together. For example, Pazaitis et al. (2017) use a Back-feed concept to illustrate how to integrate production, record and actualization of value together that can match both industrial and information economy.

Fig. 1.

How Blockchain promotes transactions.

2.2. Key characteristics of blockchain

Blockchain has the four main characteristics as follows.

Decentralization: Zheng et al. (2018) state that in a traditional centralized transaction system, each transaction needs to be verified by a central trusted agent (such as the central bank). Each party on the Blockchain can access to the database and check the history of the transaction without the third party ( Tapscott and Tapscott, 2017 ). The main advantage of this chain is its replication over a distributed network. Therefore, if a criminal or abusive government organization plans to remain undetected, they have to simultaneously change all copies of the Blockchain. Besides, distributed ledgers record transactions automatically and in real-time, reducing the opportunity for fraud ( Rennock et al., 2018 ). Decentralized infrastructures, with its limited boundary conditions, can be proven effective in managing Blockchain and its related activities ( Pereira et al., 2019 ).

Users’ anonymity: Transactions occur between Blockchain addresses. Each user on a Blockchain has a unique alphanumeric address, and they can decide to keep it secret or open to others ( Tapscott and Tapscott, 2017 ). Users can use the generated address to interact with the Blockchain network, and there is no longer any central party to store users' private information ( Zheng et al., 2018 ). This mechanism preserves some privacy. However, due to inherent constraints, Blockchain cannot guarantee perfect privacy protection.

Consensus mechanism: As there is no central trusted agent in the whole network, a consensus mechanism is introduced into the network. Its purpose is to achieve a unified agreement on the validation of every record. It is possible to forge a non-existent record by managing to control more than 51% of the accounting nodes in the entire network. Hence, any distortion is easy to detect ( Huang et al., 2019 ).

Execution: Users can make use of algorithms and rules to trigger transactions between nodes ( Tapscott and Tapscott, 2017 ). Blockchain can also execute programs if certain conditions are met. This can be referred to as a smart contract. A managing director of a Blockchain firm, H says, “ It is not merely one or two characteristics of Blockchain that render this technology creative and attract individuals' attention. The integration of property of Blockchain, such as decentralization, anonymity, immutability, makes this new technology valuable. ”

2.3. Development

Blockchain technology has gone through three generations of technological development: Block 1.0, 2.0, and 3.0. Block1.0 is a currency, and its successful project is bitcoin. Block 2.0 not only includes cash transactions but also covers mortgages, bonds, loans, futures and smart contracts. Blockchain 3.0 is a universal application and platform used by government, science, health, culture, art, and literacy ( Swan, 2015 ).

According to Feng et al. (2018) , there are three levels for Blockchain: P2P network, databases and its applications. As shown in Fig. 2 , the Global ledger level contains blocks connected. Each block includes the transactions and smart contracts and then linked to its related one. At the application level, different services can query, analyze and interpret the meanings for each block of transactions, smart contracts and financial updates.

Fig. 2.

Three generations of Blockchain.

2.4. Challenges associated with Blockchain

Blockchain has great potential but must face numerous challenges, which potentially stop the wide usage of Blockchain. The Blockchain is a distributed peer-to-peer system that everyone in the network can read the transaction records and add new data to the database. The openness and the absence of central coordination are the foundation of the system, which has negative impacts and limits the use of Blockchain ( Drescher, 2017 ). In this section, we also interviewed two experts on Blockchain who could address interesting challenges in this area. Interviewee A is a professor of Computer Science and Interviewee B is a specialist in Blockchain.

Some issues can be raised, such as scalability, security, privacy, latency and financial markets still struggle to find robust solutions ( Underwood, 2016 ).

2.4.1. Scalability

The Blockchain becomes voluminous with the increasing number of transactions ( Zheng et al., 2018 ). Marr (2018) mentioned that Blockchain transaction takes some time to implement due to their complexity, encrypted and distributed nature.

Ethereum is a well-known computing platform, which is open-source, public, Blockchain-based, and Ether is also generated by the Ethereum platform ( Biais et al., 2019 ). According to Chen et al. (2018) , more than one million smart contracts are running on Ethereum. Currently, thousands of entrepreneurs and developers are creating new projects and startups based on the Etherlane platform.

Jackson (2018) reports that while Visa manages 24,000 transactions per second, PayPal manages 193 transactions per second, when Ethereum and Bitcoin can only handle 20 transactions per second. It means that the requirement of processing millions of transactions in a short time cannot be satisfied. The reason is due to the limited capacity of blocks, which often delay some small transactions as miners instead of preferring transactions with relatively high fees ( Biais et al., 2019 ).

2.4.2. Security

According to Werbach (2018) , Blockchain-based systems are vulnerable. Since 2009, the bitcoin and Ethernet platforms with Blockchain as the underlying technology have been stolen successively, with a loss of nearly 600 million yuan. Zheng et al. (2018) state that Blockchain is susceptible to attacks of collusive self-centered miners and many other attacks have shown that Blockchain is not so secure. Price (2018) claimed that all public Blockchain are vulnerable to 51 percent attacks or 34 percent attacks because of the design of Blockchain technology. A 51 percent attack occurs when hackers are the major source of a Blockchain's computing power. Thus, they are the majority in the network and control the entire Blockchain.

Mt. Gox, the earliest and largest bitcoin trading platform in the world, announced on February 28 th , 2014 that 850,000 bitcoins, including users' trading accounts and the company's own accounts, have been stolen, resulting in a loss of 467 million US dollars. On June 8 th , 2016, hackers stole 3.6 million dollars from the Dao, the world's largest crowdfunding platform, causing a loss of 75 million US dollars. Similarly, on August 2 nd , 2016, 120,000 bitcoins were stolen from Bitfinex, the bitcoin exchange, resulting in a loss of $60 million (Blockchain Finance, p229, 2016). Finally, a Japanese exchange noted a theft of half a billion dollars of cryptocurrency in 2018 ( Werbach, 2018 )

Although Blockchain technology has shown irreplaceable practicability and uniqueness in the capital market, its immature technology status is still a challenge to regulators ( Cong and He, 2019 ). This is also the supported reflected by an interviewee. Interviewee B said, "Smart contract of Blockchain is different from a paper contract. Smart contracts use a computer language with conditions. As long as these conditions are met, it will automatically trigger the execution. For the time being, traditional paper contracts are more stable and safe.”

2.4.3. Privacy Leakage

The Blockchain can produce many addresses instead of real identity for users to avoid information leakage, which is believed to be quite safe for users. However, the Blockchain cannot prevent transactional information leakage because all information on transactions and balances are shown to the public ( Meiklejohn et al., 2013 ; Kosba et al., 2016 ). Many examples are reflecting these phenomena, such as Barcelo (2014) , demonstrating that his Bitcoin transaction can reflect the user's profiles.

The problem of privacy leakage is quite huge, which involves users’ information security. Although multiple methods have been proposed to improve the anonymity of Blockchain, the problem still has not been solved well ( Cong and He, 2019 ).

2.4.4. Energy Consumption

The execution and storage costs of big data programs can be higher than the long-term storage costs of electronic money transfers and transaction data ( Staples et al., 2017 ). Price (2018) claimed that the computing power needed to run Blockchain is rapidly growing. The bitcoin system consumes an enormous level of electricity. Indeed, the amount of electricity required by a single bitcoin transaction needs terawatt-hour. The statistics of bitcoin energy consumption in different countries and the comparison between bitcoin and VISA are listed in Fig. 3 .

Fig. 3.

Bitcoin Energy Consumption Relative to several countries and VISA.

However, for this problem, Interviewee B says: “ It depends on which Blockchain consensus mechanism you choose. If you choose the mining mechanism, it will consume more electricity. If you want the POS equity mechanism, it will not consume electricity ”.

2.5. Ethical issues for Blockchain

2.5.1. privacy.

Blockchain technology can create permanent and immutable records for participants, but it also increases the privacy risks of some entities ( Till et al., 2017 ). Meanwhile, confidentiality is challenging to build in public Blockchain-based systems, as information is visible to all participants in the network by default ( Staples et al., 2017 ).

Transparency is needed for clarifying ownership and preventing double-spending, while users require privacy ( Drescher, 2017 ). Feng et al. (2018) described that Blockchain transactions contain participants' addresses, transaction values, timestamps, and sender signatures, which makes it possible to trace transaction flows to extract user information through data mining.

2.5.2. Regulations and law

With the growing usage of Blockchain, Australia, US, South Korea, Switzerland, China, the UK, Japan, Singapore, Hong Kong, and Canada pay much more attention to regulate Blockchain to avoid fraud and other illegal activities that hurt the interests of consumers and the market ( Till et al., 2017 ). Regulatory uncertainty will have many consequences. Interviewee A said, “The technical challenge of Blockchain is that no matter how perfect the Blockchain technology is, it cannot guarantee the authenticity of offline data. The data in question will be permanently recorded on the Blockchain if there is a problem with the data source. Since Blockchain is decentralized, without the supervision of laws and personnel, and it is difficult to change records on the chain, all of these will cause some problems.” Some governments take cryptocurrencies as an illegal coin in their countries. The most popular Bitcoin is only unrestricted in about 110 countries ( Price, 2018 ), as shown in Fig. 4 .

Fig. 5.

Blockchain solution for the bank's full-service chain.

Fig. 4.

Global Bitcoin Legality.

The reason for this phenomenon is that the asset class is so new that governments and banks have not adopted the corresponding policy for them. In cases of fraud, bankruptcy and other failures, the company does not know the laws and regulations. This is particularly problematic for companies operating in multiple jurisdictions ( Lewis et al., 2017 ). Therefore, some risks exist as the taxation status and trading rules of bitcoin could change overnight.

On the other hand, a complete lack of regulation leads to manipulation by some small group of crypto owners. Nguyen (2016) asserted the lack of legal and regulation on Bitcoin and cryptocurrency hindered the full application of Blockchain. H says , “We are supposed to pay attention to the legitimacy of Blockchain. Although there are no specific regulations on Blockchain until now, relevant laws might be introduced once some new products of Blockchain appear. The award method is one of the intrinsic properties of Blockchain, so how to define the nature of these rewards, whether these conducts violate the law, all of these are needed to be discussed .”

2.5.3. Cybercrime

Public Blockchains promote competition, innovation and productivity, but they also pose challenges to regulation of money laundering, terrorist financing and tax avoidance since they do not require participants to authenticate. ( Staples et al., 2017 ). According to Price (2018) , Cybercriminals, also called computer-oriented crimes, conduct illegal activities with the network, causing harmful consequences for victims. Cryptocurrency is the payment method of criminals. Lewis et al. (2017) state that Blockchain is applied to Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements for financial applications, for transactions on a public, Blockchain is open and pseudonymous to all, while private systems have limitations to participants. Every object can be used for good or evil, and it merely depends on who is using it.

3. Blockchain's development in the financial sector

3.1. blockchain in the financial industry.

Drescher (2017) believes that the openness of Blockchain and the absence of any form of central control are the basis for its operation but may also limit its adoption. Andolfatto (2018) asserts that the most important non-technical limitation of Blockchain is the lack of legal recognition and user recognition. Nevertheless, Blockchain (non-cooperative consensus) has a comparative advantage in supporting decentralized autonomous organizations (DAOs). As Carolyn Wilkins points out, Senior Deputy Governor of the Bank of Canada, “It's hard not to be fascinated by something so transformative. Blockchain technology is being used in ways that have implications for central banking that span all the functions that we have.”

Although the development of this emerging technology is still immature and faces many challenges and limitations, large international banks and other financial giants have rushed to lay out the field and invest resources in technology development and experiment. Based on Interviewee A ," finance is the natural application scenario of the Blockchain, and cryptocurrencies are also by far one of its most successful applications, such as bitcoin. The volatility of bitcoin's price has been widely criticized, but its value cannot be denied.”

However, technology needs time and talents to explore its possibility. McAfee 1 (2018) concludes that the government should deliver relevant Blockchain knowledge to the public and companies, who will benefit from modern Blockchain technology.

Many research papers and projects on the Blockchain are focusing on bitcoin. However, bitcoin is only a small part of Blockchain, which can be applied to many fields. Blockchain can be blend with other technologies to create more significant impacts. According to Interviewee B, she said," The Blockchain is decentralized, while the bank is a centralized system. If the underlying technology of the Blockchain can be used to make a centralized system, I think the Blockchain technology can be used in the banking industry.”

For example, Blockchain can blend with big data, since transactions on Blockchain can be used for big data analysis. Moreover, users can predict the potential development of trading activities. The only exception is that the improvement of Blockchain technology can create many new opportunities.

3.2. Influences of Blockchain on the financial industry

With the rise of Internet finance, the forms of Yu 'ebao, P2P and third-party payment platforms have accelerated the process of financial disintermediation. This asset-light and service-heavy model has severely impacted the traditional financial business of Commercial Banks, and the reform of the traditional banking industry is imminent. Affected by user demand and market competitiveness, traditional Banks have begun to layout Internet finance, but the effect is not ideal. It is also driving traditional banks to seek new technologies and ways to speed up the Internet. Blockchain might fundamentally change the existing finance and the FinTech industry due to the innovation in storing and transmitting data ( Mu, 2016 ). Cocco et al. (2017) estimated that Blockchain has the potential to optimize global financial infrastructure or transfer assets more effectively than the existing financial system. Research on the impacts of Blockchain has shown that it can minimize costs and bring changes to the financial field in a long time ( Nguyen, 2016 ).

Under the prevalence of Blockchain, commercial banks actively develop and apply Blockchain technology to improve the current centralized banking system. The financial organizations cut out the middleman by utilizing Blockchain's security, immutability, transparency of the Blockchain ( Underwood, 2016 ). On the other hand, Hassani et al. (2018) state that Blockchain can bring opportunities as well as threats to the banking industry. Banks’ attitude to Blockchain is contradictory, and the main reason is the banks play the role of the middleman and get rewards for the trust role for a long time, while the Blockchain is the technology to cut the central role. Hence, what is the real power to attract banks to explore the new technology?

3.2.1. Real motivation for banks

Banks are the backbone of the financial system. However, based on Shenzhen Institute (2016) 2 , banks are outdated institutions and no longer focus on customer loyalty. Few would agree that the current banking system is modern or could be considered an "honest institution", due to recent scandals that have impacted giants such as Goldman Sachs and Deutsche Bank.

According to Heires (2016) , major corporations have begun to explore Blockchain technology in the past years. Bank of America has drafted 35 patents related to Blockchain. Barclays, Citigroup, Goldman Sachs and UBS have formed the R3 CEV consortium to explore the Blockchain's potential to reduce costs. The NASDAQ stock exchange and Visa-backed startup called chain have launched Linq, which is based on Blockchain technology.

Blockchain technology has changed the business model and technical characteristics of traditional banks. The real motivations, for international financial giants and local commercial banks, to apply Blockchain are as follows:

First, it reduces costs and value transfers. Commercial banks often need to invest a lot of money in a centralized database, since terminal maintenance and purchase costs are high. On the other hand, many bookkeeping and settlement work add to the labor costs and human operation risk. Blockchain technology can solve these problems, since the use of a decentralized ledger and Blockchain's automation can build a model with low costs and transparency, without spending ( Nguyen, 2016 ).

Second, it can control risks more effectively. Commercial banks emphasize the monitoring and tracking of loan use, but the actual operation is not so reliable and effective. Additionally, global regulation of capital circulation can make it more challenging. The multi-centered feature of Blockchain technology treats each user as a node in the Blockchain, enabling direct peer-to-peer transactions between borrowers and lenders, eliminating the need for credit guarantees by banks as intermediaries. The credit risk, brought by information asymmetry, is considerably reduced and the efficiency of fund management is improved.

Finally, it seeks innovative ways to profit. In the financial sector, more and more industry giants are investing in Blockchain technology startups or working with startups, including banks, as well as investment institutions. In this fiercely competitive environment, banks need to seek innovative profit models to develop financial products and open markets.

Blockchain's innovation and transformation of the traditional financial business of commercial banks are reflected in all aspects. From bank business to transaction participants, including those involved in the optimization of various processes in financial services. Blockchain technology may systematically solve the whole business chain for banks. As shown in Fig. 3 , details are as follows. First, Blockchain technology is applied to different lines of business in banks, from payment settlement to bills and supply chain finance. The aim is to understand customers and potential anti-money laundering risk management areas better. Second, Blockchain technology will change the financial business model of all parties involved in the transaction and improve business efficiency. For banks, the application of smart contracts can save labor review and billing costs, a lot of manual work and knowledge-based work will be automated, and talents should fully utilize their cognitive skills. Besides, the Blockchain can address the inefficiencies, high costs, fraud and operational risks of various processes in financial services.

Therefore, the multi-centered Blockchain, public autonomy, and non-tamperable characteristics have fundamentally changed the centralized banking system business model, optimized the bank back-office and infrastructure, improved service efficiency and user experience, and provides a transformation opportunity for the bank from traditional financial business to the internet finance business.

3.2.2. Blockchain strengthens risk management

One area that has made great strides in fighting Anti-Money Laundering (AML) is the use of Blockchain technology to effectively identify suspicious transactions by tracking customer transactions and activities in real-time ( Lai, 2018 ). AML refers to activities aimed at preventing crimes such as drug-related crimes, terrorist crimes, smuggling crimes, corruption and bribery crimes, crimes against the order of financial management. Nevertheless, the ways the laundering of money is organized are diversified, and the process is complicated, as the internationalization of circulation increases the difficulty of tracing the whereabouts of funds. Once money laundering occurs, it will hugely harm the safety of the international financial system.

Providing relevant and useful services for customers can be expensive. The reason is further explained by the fact that the customers must take more time to process the documents and information. H says, “ It is not merely one or two characteristics of Blockchain that render this technology creative and attract individuals' attention. The integration of property of Blockchain, such as decentralization, anonymity, immutability, makes this new technology valuable ). Know Your Customer (KYC) needs a company to verify the identity of its clients and predict potential risks of illegal intentions for the business relationship.

Blockchain technology is used to optimize the financial institutions' AML and KYC processes, which are also crucial for Industry 4.0 development ( Dhanabalan, and Sathish, 2018 ; Mashelkar, 2018 ). First, the ins and outs of each fund of financial transactions can be traced back to prevent supervision through the non-tamperable time stamp of distributed ledgers and the characteristics of public autonomy of the whole network. Vulnerabilities, laws and regulations are not perfect, resulting in the flow of illegal. Second, the entire block network data is stored on each node to achieve information shared and reduce the duplication of audit work. Third, the credit history and transaction information of all participants are stored in the general ledger of the Blockchain and shared by each node. When the KFC process is passed, all the new customers' data can be quickly located, saving time and improving efficiency. Blockchain technology can save personnel and technology costs for AML and KYC.

4. Data and methods

4.1. data collection and management.

In this study, the method of the interview was employed. The interview was the most appropriate research method since a large volume of information can be obtained to understand the current status in the Blockchain technical development, marketing and business adoption. Apart from the descriptive information of interviewees, open-ended questions were largely adopted to suit each interviewee's case. The reason this study used this method was that open-ended questions could provide more opportunities and rooms of development for interviewees. Moreover, primary information related to the Blockchain can be obtained from the open-ended questions and it is more direct and valuable than other information.

In order to obtain the primary information from the experts and professionals related to Blockchain, 100 target interviewees were invited and 16 of them accepted the invitation and were willing to provide their knowledge and insights. To protect their privacy, their identities remained confidential. These interviewees are suitable for this research for several reasons. First, they are experts in the area of the Blockchain and the information they provide is a professional and true reflection of current industry status. Second, the background of the interviewees is diverse. Some interviewees come from research institutions and some of them come from the Blockchain industry. Their research or experiences allow this study to collect primary data from diverse backgrounds and learn about the Blockchain challenges across different sectors. Finally, the interviewees live or work in different countries, and their information may allow this study to better understand the Blockchain's world and its impacts on Industry 4.0.

After data collection, this research adopted open coding for interview information, since each institute or business entity may have different focuses. In addition, two of the authors coded the interview transcripts separately to ensure greater reliability. Before concluding the summary of our research, coding results were carefully compared by independent researchers to ensure data consistency.

Respondents’ characteristics are presented in Table 1 . It can be seen that the interviewees were aged between 25 and 48 years old, with an average age of about 32 years old and an average of 3.9 years of finance or R&D-related experience. The respondents live and work in different countries (UK, USA, China, France, Australia, New Zealand, India, Korea and Singapore) with a wide range of expertise and demographics.

Descriptive information of interview participants.

ParticipantAgeGenderSectorTime worked in the R&D or finance teamThe country where the team locates
R127FemaleResearch3 yearsUK
R230MaleMedia2 yearsUK
R325MaleIT2 yearsChina
R425MaleResearch3 yearsChina
R527FemaleFinance4 yearsChina
R638FemaleHigher Education3 yearsIndia
R733MaleHigher Education3 yearsIndia
R834MaleResearch5 yearsAustralia
R926FemaleProfessional Services2 yearsUSA
R1034MaleIT/Blockchain4 yearsKorea
R1132FemaleProfessional Services5 yearsUSA
R1238MaleHigher Education7 yearsFrance
R1328FemaleIT4 yearsChina
R1443MaleIT8 yearsChina
R1548MaleHigher Education5 yearsSingapore
R1644MaleFinance4 yearsNew Zealand

4.2. Methods

NVivo 12 was used to analyze all the interview transcripts and coding of the interview transcripts was based on the theoretical framework of the Theory of Planned Behavior (TPB), which includes Attitudes toward the behavior, Subjective Norms and Perceived Behavioral Control. Attitude refers to a person 's positive or negative sense of behavior. Subject norms mean the social pressure that a person feels on whether to take a certain action and perceived behavioral control is used to reflect a person's experience and anticipated obstacles. A person's perceived behavioral control is stronger when the person assumes that he/she has more resources, opportunities, and less anticipated obstacles ( Ajzen, 1991 ). TPB can also be very useful for architects and investors. For architects, they can identify what the popular demands, so that they can design and implement products or services that can get more clients. For investors, they can identify the likely companies that can be profitable and increase their stake.

TPB is a suitable method for this research since certain practices (related to a grey area described in Section 8 earlier) are behavioral driven and require interviews to explore the possibilities and rationale behind.

5. Results and analysis

In Blockchain's current adoption, knowledge hiding within the company and between collaborating partners was considered an obvious but serious issue since the secret related to the Blockchain advancement may have huge impacts on competitors, investors, and the market. Some information can be revealed in each company, and some cannot be revealed until the product has been released or has passed major tests or milestones, or until the investment deal has been signed officially with all the investors’ endorsement. Before the legislation, it could be time for some businesses to take advantage. For example, each business could enter the market with more aggressive approaches, or the products with fewer ethical concerns could be passed for market adoption. Therefore, we identified experts who could provide us insights into this raising concern and their recommendations.

One aim of this research was to identify what constitutes knowledge hiders' attitudes, subjective norms and perceived behavioral control toward knowledge hiding for Blockchain. Authors would like to double-check this is a common cross-sectors and cross-countries issue. These sixteen interviews could represent important feedback based on their knowledge of their sector or their country or both. An in-depth understanding could be concluded based on the analysis of those three main antecedents of “knowledge hiding intentions”.

The findings on knowledge hiders’ attitudes toward knowledge hiding for Blockchain is presented in Table 2 , which match interview insights into the dimensions related to TBP.

Knowledge hiders' subjective norms surrounding knowledge hiding.

Example InsightsFirst-order ConceptsSecond-order ThemesAggregate Dimensions
It is common, let it be, but share some of it periodicallyDescriptive norms of knowledge hidingSubjective norms surrounding knowledge hiding
The manager understands but talks privately
It is a personal choice with the freedom to say or not with the manager's intervention.Injunctive norms of knowledge hiding
The manager cannot accept this and has taken more drastic approaches.
It will not be changed for the time being

Knowledge hiders' attitudes toward knowledge hiding.

Example InsightsFirst-order ConceptsSecond-order ThemesAggregate Dimensions
Sense of superiorityAffective evaluationsAttitudes toward knowledge hiding
Fulfilling personal satisfactionBehavioral evaluations
Avoiding waste of time
Beneficial at the individual levelsCognitive evaluations
Beneficial at the team level
Perceived risks

According to R1, a sense of superiority could be installed in her team and the organization, since she feels that she owns certain new knowledge that others do not know. An IT-driven environment gives her the advantage over others, since her supervisor can assign her a higher level of responsibilities. Her sense of superiority can also earn respect from her teammates. Hence, effective evaluations can be the reason for driving her towards knowledge-hiding. This also reinforces views from Kumar Jha and Varkkey (2018) . They argue that one major reason for knowledge-hiding is due to the sense of superiority that immediate respect from colleagues and supervisors can be earned and positive acknowledgment from supervisors may have a better chance for career development. The difference between R1 and R2 interviewees is that R2 feels his advanced knowledge can put him in a better position than others. He is not going to show off but feels a more sense of security since IT is a very competitive sector. Thus, this case is more towards "Beneficial at the individual levels”. One way or the other, it is easily transferrable depending on the individual's motivation and actual intention of knowing and hiding new knowledge in Blockchain. On the other hand, R10 believes that if he knows something, others do not know yet, giving him a sense of satisfaction. This is similar to the feeling of being the first person achieving a new task or something challenging. Therefore, it is classified under Behavioral evaluations. On the negative aspect of Behavioral evaluation, R9 thinks it is a waste of time since senior management does not accept new concepts. As a result, he keeps new knowledge to himself.

Knowledge-hiding in Blockchain can be due to “Beneficial at the individual levels" in Table 2 . R2, R8 and R16 do not use the advanced knowledge to show off or impress their supervisors; rather, they take a more defensive approach. They fully understand that Blockchain adoption is a very competitive market and that they must be highly skilled and competent in both technology and business areas. Therefore, they need to have deep knowledge, perform in implementation and experiments, and quickly adapt their work due to market changes. They feel that getting that new knowledge can secure their current position. On the other hand, R10 does this intentionally to stimulate new employees to think of solutions and ways to overcome problems rather than relying on "spoon-fed" answers and recommendations. Indeed, Blockchain is an area that can evolve fast, and employees may have to equip the new skills and knowledge that are often attending lecture-based training may not achieve long-term benefits. Experiential learning or problem-based learning can result in better long-term benefits.

R7, R14 and R15 have identified risks of Blockchain adoption in their organizations. They come from the angel that others can steal their ideas directly or in a longer process. Hence, they have been careful in their work and do not reveal much about what they do, until it is confirmed that they can understand that there will be less or no impact on their work. In this case, before the wide adoption of Blockchain in banks and financial services, this ethical concern of knowledge-hiding should be overcome or improved clearly. Recommendations from these interviewees were taken to ensure that Blockchain can be used more widely and more conveniently.

6. Recommendations and discussions

Each interviewee was asked for recommendations in two areas answering the following questions ( Table 2 ): 1) How to improve current situations in knowledge-hiding for Blockchain adoption; 2) How Blockchain can be better used, accessed and adopted by financial services and other organizations. Their comments were carefully recorded, compared and then divided into three categories as follows.

6.1. How to improve current situations in knowledge-hiding for Blockchain adoption

TPB can be used effectively for this case. In fact, some organizations are aware of this issue and have implemented some actions classified under subjective norms. As an example, within R3’s organization, the staff needs to share their knowledge with others during the presentation. However, depending on the potential perception of risk, managers could decide to talk privately with the person in charge, such as in R5’s structure. Both R3 and R5 are under descriptive norms since their organization can talk to them about knowledge-hiding for Blockchain openly or privately.

In R4’s case, due to the highly skilled area criteria, he was unable to grasp the manager's ability to intervene fully. Then, he decided to adopt a soft and open approach and surprisingly, some employees started to share some “secrets” or tips on improving the Blockchain implementation. R5’s organization took a more authoritarian approach to information sharing but did not announce when the change will take place. R13 and R1 face a similar situation where the organization cannot accept knowledge-hiding. All employees in charge of Blockchain topics have been asked to present their work. Indeed, R13’s organization makes it a policy to demonstrate their knowledge and work done for Blockchain regularly. R16’s organization relies more on the manager to extract knowledge from his team and spread it with others within the company, in changing potentially the internal culture. On the other hand, R6 and R10′s organizations will not change their policies regarding knowledge-hiding for the time being due to different reasons. Their motivation for doing so is due to the insecurity of jobs, especially since the Year 2020 due to COVID-19. Job losses and discontinuation of contracts are common as a result of the scale-down of business activities and travel. Financial services with Blockchain development have been affected due to the economic downturn.

Ten out of sixteen interviewees feel that a certain extent of knowledge sharing can help the development and adoption of Blockchain. However, it should be done in fair and independent ways without forcing employees to devote more than necessary. A more structured, well-balanced and comprehensive way can be developed to achieve better benefits for the organizations, employees and client organizations.

6.2. How Blockchain can be better used, accessed and adopted by financial services and other organizations

The critical success factors identified for the adoption of Blockchain solutions within financial services and research departments are highlighted below:

  • Enough capitals and good financial management – All the interviewees suggested that companies deciding to implement Blockchain must have enough capital as its implementation is costly and not all organizations can afford this in the long-term.
  • Align the organization's activities with Blockchain initiatives – The main activities of the financial department should be aligned with the decision to use Blockchain's solutions (research or real services or both). Indeed, if the companies do not specialize in banking investment, they should not take the risk to address this new market.
  • Sufficient energy and electrical supplies – Blockchain will require a large consumption of electricity and abundant energy supplies can impose a requirement for using or adopting Blockchain.
  • Reliable high computational power – similarly, Blockchain will require high-end computers nearly at the supercomputers' levels in order to run thousands or millions of calculations per second. Reliable high computational power with suitable cooling, abundant energy supplies, low risk to natural disasters and accidents (e.g., fire), can make all transactions safe and secure.
  • Intelligent algorithms with mathematical complexity – Blockchain requires the support of complex mathematics running behind high-end computational power. This also needs intelligent algorithms to run behind the scene reliably every second.
  • Well-trained teams – In this paper, this factor has been discussed in-depth, particularly the issue and fights against the knowledge-hiding. To make Blockchain implementations and services performing well, dedicated teams with different expertise are required.
  • Security and privacy – Ensuring a high-level of security and privacy has become very important. High-end encryption algorithms, personal identifier removal, a combination of passwords and biometric authentication, plus specialized access control, can all together make Blockchain a safer environment for work.
  • Analytics and user interfaces – Analytics functions can allow their clients to execute simple Blockchain requests behind the scenes. The operations are easy to do. Results can be returned within minutes. In this way, their clients feel it is accessible and convenient.
  • Focus on product development, quality assurance, reputation and community building –A lot of financial services focus on the market share or their perceived value by the market. Interviewees say that the first step in the implementation of Blockchain, is to propose a high-quality product, then build up their reputation and, eventually, their own community. This is a step-by-step process. They said some firms or banks failed due to inferior quality products. Their clients like Blockchain's solution, but still feel its adoption as “risky”.

6.3. Proposition

In this section, we sum up the agenda from the overview of Blockchain between Sections 1 and 6, and the challenges and recommendation raised by our expert interviewees, and present them in the form of proposition. These propositions support our contributions based on current industrial research.

Blockchain can bring disruptive changes to banks and financial services, with both positive and negative impacts. Banks and organizations that adopt Blockchain should manage technology, change of culture and employees working on Blockchain.

Our study has identified that banks and organizations that adopt Blockchain have positive aims and objectives. They have been keen to develop new products and services, and aim to enter the market as an early pioneer, with the common plan to get to sufficient market share. Blockchain can offer the dynamic changes to the organization, since it can attract more attention and investment opportunities from the shareholders, and financial services are more willing to scale up the level of services and product development. New teams (including marketing, research and IT) have been formed with more clients and business opportunities available. On the other hand, the impacts offered by Blockchain adoption can also be destructive as follows. First, it has changed the ways that employees work and communicate within the organization. Second, employees are required to learn new skills and knowledge, since the changes in Blockchain adoption can be rapid. It is also difficult to get professional help, since other "experts" are still learning new knowledge themselves. Third, not all the organizations have been entirely ready for the Blockchain adoption. Knowledge hiding and its related issues have been a result of this challenge.

Knowledge hiding can be a common issue in organizations that adopt Blockchain. This can be due to affective, behavioral and cognitive evaluations of their behaviors. Acknowledging knowledge-hiding is important since organizations can develop processes and better strategies to manage, monitor, evaluate and fair knowledge-hiding more equally.

The TPB theory can be used to explain the occurrence of knowledge-hiding in the context of affective, behavioral and cognitive evaluations. Knowledge-hiding can happen for feeling superior in the team, or feeling more secure about jobs, or feeling the need to do so to prevent other employees from overtaking their positions. Organizations that adopt Blockchain should take knowledge-hiding proactively, openly and more honestly. Managers can act as excellent communicators, since encouraging their employees for better motivation and the long-term benefits for "incremental" knowledge-sharing can be more productive. It is also fine for organizations to develop policies in terms of sharing and presenting their findings in advanced skills and knowledge, and make it a rewarding culture rather than a culture that may penalize those with advanced skills. Organizations should also invest in training employees to be equipped with advanced skills in managing destructive technology.

A comprehensive Blockchain adoption framework should be developed to manage, evaluate and integrate recommendations from expert interviewees fully.

Section 9.2 presents recommendations based on expert interviewees and their years of experience in adapting, using and investigating Blockchain. Their valuable recommendations are insightful to provide an effective workaround to overcome knowledge-hiding but improve on accessibility, adoption and efficient use of Blockchain. In summary, three main factors include technological, organizational and people (TOP), with impacts on the current entrepreneurial finance landscape. Technological factors include high-end computational powers, sufficient energy supplies, smart algorithms, analytics, security and privacy. Organizational factors include good financial management and align the organization's activities. People factors include the well-trained teams and its management to overcome impacts due to knowledge hiding, but develop the organization into a culture of incremental knowledge-sharing and mutual collaboration. The factor “focus on product development, quality assurance, reputation and community building" is the result of effectively exercising these three factors. First, the product should have excellent quality with a vigorous quality process. Second, the organization can develop a culture to use incremental knowledge sharing to gain their positions in the market. When the teams can develop better collaboration and develop good client relationships, a strong community can eventually be established. This will require a TOP Blockchain adoption framework, as our next phase of research, to recommend how the organization can develop and manage Blockchain adoption. Despite the TOE framework has been popular, environmental factors are less suitable in the case of Blockchain adoption.

Knowledge-hiding can happen before the next wave of a downturn due to economic uncertainties.

The downturn can happen due to various reasons, which may include the scale down of business activities, global recession, and large-scale crises, which is not desirable for the development of Fintech and Industry 4.0. In the Year 2020, the COVID-19 has become a pandemic. It is not only a public health crisis but also an economic downturn. Due to the lockdown of cities, closure of some businesses and scale down of business activities, loss of jobs and discontinuation of contracts have become common in financial services. Therefore, knowledge-hiding can happen due to due to economic uncertainties. Individuals are doing this to prevent others from getting job opportunities. Businesses are doing knowledge-hiding to avoid other businesses knowing how to attract customers and maintaining their competitiveness. Therefore, swift actions for remedies and stimulations of economic packages should be on offer while tackling the public health crisis.

6.4. The interview sample size

The result of this research is limited by the sample size. Due to the limited resources, the authors were just able to invite 100 target interviewees and only 16 of them accepted the invitation. The small sample size may result in a biased result or that the comprehensive understanding of the status of Blockchain adoption cannot be obtained. However, it was difficult to get more interviewees, since many of their employers did not allow them to enclose further information. Addtionally, it was common in the financial industry, not to enclose information that could have direct and indirect impacts on their businesses. Therefore, our future work should target more related interviewees with diverse backgrounds and also widen the business sectors, such as IT, Higher Education and Healthcare. We should also get difference compliance and legal requirements, such as General Data Protection Regulations (GDPR) if interviewing Blockchain practitioners and researcher based in European Union.

7. Conclusions and future work

This paper highlights the fact that the financial industry is on the edge of a new financial era using a new destructive system based on Blockchain. The previous products and services proposed by the finance sector were considered as costly and inefficient. Consequently, a massive transformation was required. Tang (2018) pointed out that Blockchain could represent credit reconstruction, a cross-time consensus mechanism that enabled people to trust each other without social relations and credit accumulation. Blockchain technology had the power to improve the efficiency and security of financial markets, although there was much work need to solve the underlying problems ( Lewis et al., 2017 ). Therefore, the current status and industrial practices of Blockchain adoption in financial services were discussed in some details. Challenges faced by different countries had little differences and recommendations could be addressed to minimize such impacts.

While the development of Blockchain was not mature yet, we should improve our technology and system supervision to the Blockchain. The government and relevant departments should formulate policies to enable the public to benefit from Blockchain and strictly prevent the illegal use of Blockchain to engage in money laundering, terrorist financing and even capital control activities ( Nguyen, 2016 ). Undoubtedly, Blockchain could be a very competitive and “imaginative” technology that might change the financial and commercial infrastructure of our society in the future. Financial services should take a long-term view and start to explore the implementation of Blockchain technology to improve their business, otherwise due to the competition, and they could be eliminated eventually. By using interviews as the main research method, it could allow us to identify the most serious problem, knowledge-hiding, which could prevent further development and success of Blockchain adoption. Thus, knowledge-hiding reasoning should be fully understood with ways to minimize its impacts, before resolving other technical challenges such as energy, scalability, security, as well as ethical challenges related to legal regulations and cybercrimes.

However, interviewees still provided valuable insights into the current status of Blockchain adoption. Knowledge-hiding was a rising issue. One of the contributions of this research is that, based on reinforcing the previous research on knowledge hiding, discovered some unique reasons for hiding information in the financial industry using Blockchain. Jha and Varkkey (2018) believed that knowledge-hiding might bring one sense of superiority and help him or her to earn respect from others or achieve a better career development. Anand and Hassan (2019) considered that the reason for knowledge hiding is due to that employees are afraid of losing their current power or position, or their work may be impacted. This research agreed with their views. However, different from them, two other reasons were provided by the interviewees. One reason is that employees think it is a waste of time since senior management often refuse to accept new concepts. The other reason is that some experienced employees believe that in a fast-growing area of Blockchain, experiential learning, or problem-based learning can result in better long-term benefits than lecture-based training. Therefore, it is important for new employees to think of solutions and ways to overcome problems on their own.

For the technical development and advancement in business opportunities, knowledge sharing would be required, but it should be structured, using a step-by-step process, and focused on product development, ensuring a high quality, a good reputation and building a community. Market share was only a reflection of what the company and its products’ standing of their past and current performance. It did not guarantee that their products or services or market could stand for long. Their main challenges are to foresee what could happen, whether positive or negative perspectives and to demonstrate their abilities to adapt their organization to the change of paradigm of the market. All these help us to develop three propositions based on our research and recommendations from our expert interviewees. Recommendations and lessons learned were useful for organizations adopting Blockchain and new ways to manage knowledge sharing and improvement in efficiency better.

Other researchers should investigate if the knowledge-hiding is also an issue within other markets, not only financial services, which tend to disclose their business successes to avoid competitors gaining advantages. Furthermore, a framework can be developed to help and allow knowledge sharing in a more structured and balanced way, so that certain critical knowledge can be hidden for defensive approaches like the “Beneficial at the individual levels”. Additionally, other knowledge can be used in order to explain to a general audience the benefits of Blockchain adoption and minimize the perceived risks of Blockchain. Our future work will focus on the development of such a Blockchain adoption framework, focusing on technological, organizational and people (TOP) factors dealing with successful Blockchain adoption and allowing Blockchain to serve different types of business activities and services well enough. We will also investigate how to maximize Blockchain adoption in the post-COVID-19 period and recommend strategies and best practices for businesses and individuals.

This research is supported by VC Research with grant number VCR 0000020.

CRediT authorship contribution statement

Victor Chang: Conceptualization, Data curation, Formal analysis, Funding acquisition, Methodology, Project administration, Supervision, Validation, Writing - original draft, Writing - review & editing. Patricia Baudier: Formal analysis, Validation, Writing - review & editing. Hui Zhang: Data curation, Investigation, Writing - original draft. Qianwen Xu: Formal analysis, Validation, Writing - review & editing. Jingqi Zhang: Methodology, Writing - review & editing. Mitra Arami: Resources, Writing - review & editing.


Prof. Victor Chang is currently a Full Professor of Data Science and Information Systems at the School of Computing, Engineering and Digital Technologies, Teesside University, Middlesbrough, UK, since September 2019. He co-leads computational Biology and Data Analytics research Group, and is the Research Leader for Beneficial Artificial Intelligence Research Group. He was a Senior Associate Professor, Director of Ph.D. (June 2016- May 2018), Director of MRes (Sep 2017 - Feb 2019) and Interim Director of BSc IMIS program (August 2018-February 2019) at International Business School Suzhou (IBSS), Xi'an Jiaotong-Liverpool University (XJTLU), Suzhou, China, between June 2016 and August 2019. He was also a very active and contributing key member at Research Institute of Big Data Analytics (RIBDA), XJTLU. He was an Honorary Associate Professor at University o f Liverpool. Previously he was a Senior Lecturer at Leeds Beckett University, UK, between Sep 2012 and May 2016. Within 4 years, he completed Ph.D. (CS, Southampton) and PGCert (Higher Education, Fellow, Greenwich) while working for several projects at the same time. Before becoming an academic, he has achieved 97% on average in 27 IT certifications. He won a European Award on Cloud Migration in 2011, IEEE Outstanding Service Award in 2015, best papers in 2012, 2015 and 2018, the 2016 European award. He is a visiting scholar/Ph.D. examiner at several universities, an Editor-in-Chief of IJOCI & OJBD journals, Editor of FGCS, Associate Editor of TII & Information Fusion, founding chair of two international workshops and founding Conference Chair of IoTBDS and COMPLEXIS since Year 2016. He is the founding Conference Chair for FEMIB since Year 2019. He published 3 books as sole authors and the editor of 2 books on Cloud Computing and related technologies. He gave 18 keynotes at international conferences. He is widely regarded as one of the most active and influential young scientist and expert in IoT/Data Science/Cloud/security/AI/IS, as he has experience to develop 10 different services for multiple disciplines.

Dr. Patricia Baudier prepared her Ph.D. in management science within the Business School of Mines-Télécom Institut in 2013. She is an associate professor of marketing at EM Normandie in Paris (France). Her research focuses on the acceptance of new technologies, innovations, consumers behavior and Digital Marketing. She spent 28 years within major American companies such as Apple and Kodak, mainly at marketing positions. Patricia has authored several papers in leading journals of innovation, management and marketing and a book "Lexique du digital". She recently has researched Blockchain.

Miss Hui Zhang is an MSc in Business Analytics graduate from Xi'an Jiaotong-Liverpool University, China. She studied under Prof. Chang for one semester and worked part-time for this project.

Miss Qianwen Xu is an MSc in Business Analytics graduate from Xi'an Jiaotong-Liverpool University, China. She graduated with distinction. She has worked with Prof. Chang for one and a half years. She will start a PhD with under Prof. Chang's supervision. She has contributed to progress of several projects and publications.

Miss Jingqi Zhang completed MSc in Finance from Xi'an Jiaotong-Liverpool University, China. She has worked with Prof. Chang for a short period. She will start a PhD with under Prof. Chang's supervision.

Dr. Mitra Arami is the head of Institute for Entrepreneurship and Innovation at University of Applied Sciences Wiener Neustadt and the head of Startup Center. She obtained her B.Sc., M.Sc. and Ph.D. in Management Information Systems from Technical University of Vienna. She has more than 25 years record in business and strategic IT consulting, project and programme management and cross-organizational business process integration within telecommunication, IT and oil and gas industry. She has designed several degrees in Higher Education and has extensive experience with international accreditations (EQUIS, FIBAA, AMBA, IPMA, PMI). She has been conference chair in information systems and project management since 2003 and Editor / Reviewer. She was also involved in design and development of Startup and incubations programs in the Middle East and is currently responsible for Design and delivering courses in field of Entrepreneurship and Innovation. As head of Institut for Entrepreneurship and innovation, she is acting as the nexus between the university and the community with respect to research initiatives of mutual benefit, collaborative research of mutual benefit and developing mutually beneficial linkages with industry in order to develop partnerships and collaborative research.

1 McAfee Highlights Blockchain Cybersecurity Risks 2018 Computer Security Update,19(7)

2 Shenzhen Qianhai Hande Internet Finance Research Institute (2016), Blockchain finance. Beijing: CITIC Publishing House

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  • Directories

Green FinTech

Technology and Sustainability are the two key driving forces shaping the future of financial services. Accordingly, MAS has been actively promoting FinTech and Green Finance. The FinTech journey began in 2015 and Singapore is today often cited as one of the leading FinTech hubs in the world.

The Sustainability agenda is more nascent, with the launch of the Green Finance Action Plan in 2019. One of the key strategies is to harness our strengths in FinTech to address the key challenges in the Green Finance space – what we call Green FinTech .

"FinTech in particular has great potential to be a force for good. We can bring together the power of finance and technology, to help create a more inclusive society and a more sustainable planet."

–  Ravi Menon, former Managing Director, Monetary Authority of Singapore FinTech for an Inclusive Society and a Sustainable Planet

Project Greenprint

Project Greenprint is a collection of initiatives which seeks to harness technology and create a data-centric ecosystem to support the financial sector’s sustainability agenda. There are two thrusts: (1) Building digital utilities and (2) Developing a vibrant ESG FinTech ecosystem. 

Our Objectives

blockchain in finance services or fintech research paper

Vibrant Ecosystem

Growing a vibrant Green FinTech ecosystem in Singapore; scaling Green FinTech solutions beyond Singapore

blockchain in finance services or fintech research paper

Drive Partnerships

blockchain in finance services or fintech research paper

Trusted Data Flows

Developing digital infrastructure to facilitate the flow of consistent, clear and reliable ESG data, with access to other global and sectoral data platforms

1. Project Greenprint Platforms MAS will partner the industry to develop digital utilities that facilitate the efficient flow of trusted ESG data, to support financial institutions and businesses in mobilising capital to sustainable projects, monitoring commitments and measuring impact. 

Greenprint Visual

An integrated disclosure portal to ease sustainability reporting and enhance access to ESG data. Reporting companies can upload corporate-level sustainability data onto the portal, of which will be mapped against various standards and frameworks. This addresses corporates’ current pain points where they must report in different systems, templates and formats. On a consent basis, these data can be shared with authorised recipients, facilitating the transfer of data to multiple stakeholders. The project started with a pilot with SGX for listed issuers in Singapore, which was launched successfully in September 2022. Beyond the pilot, the portal will seek to also reflect other regulatory or voluntary disclosure requirements by other government agencies and private sector players based in Singapore. 

Read  press release on official launch of ESGenome Disclosure Portal ESG Registry The Greenprint ESG Registry, which is developed in partnership with Hashstacs Pte Ltd (“STACS”), aims to be a blockchain-powered data platform supporting a tamper-proof record of sustainability certifications and verified sustainability data across various sectors, providing financial institutions, corporates, and regulatory authorities a common access point for these data. This will facilitate better tracking and analysis of corporates’ sustainability commitments, impact measurement, alleviate greenwashing risks, and improve management of ESG financial products.

The Greenprint Registry will be powered by STACS’ ESGpedia, which is currently deployed in its beta phase, with ongoing partnerships with numerous leading financial, non-governmental organisations (“NGOs”) and a growing ecosystem starting with the agri-food, building and construction, transport and logistics, carbon credit, and renewable energy sectors.

Read press release on official launch of ESGpedia   Data Orchestrator The data orchestrator aggregates sustainability data from multiple data sources - major ESG data providers, utilities providers, the ESG Disclosure Portal, and other sectoral platforms, and provides consent-based access to these sources. The platform will enable new data insights to be generated through data analytics to better support investment and financing decisions. Greenprint Marketplace The Greenprint Marketplace facilitates the growth of a vibrant green fintech ecosystem by connecting green fintech and green technology providers to investors, financial institutions and corporates. The digital platform will provide curated listings of solution providers, solution seekers and investors to facilitate discovery, acceleration of partnerships and channeling of investments towards green and sustainable solutions and initiatives. It is expected to launch in 2023. 

2. ESG Impact Hub

The Environmental, Social and Governance (ESG) Impact Hub is launched by MAS, dedicated to co-locating and facilitating collaboration between ESG FinTechs, financial institutions and real economy stakeholders to promote the growth of a vibrant and active ESG ecosystem in Singapore.

ESG impact hub infographic

Parties interested in establishing a presence at the Hub and/or pursue collaborations with the hub community may reach out to [email protected]. More information about the hub can be found at the Hub website . 

Read press release on the official launch of the ESG Impact Hub

Singapore's Green FinTech Initiatives

Financial sector technology and innovation scheme.

MAS has earmarked S$50 million out of S$250 million from the FSTI scheme to support Green FinTech solutions and projects.

Green & Sustainable FinTech Sub-Committee

The Singapore FinTech Association launched the Green & Sustainable FinTech Sub-Committee to bring together the FinTech ecosystem to focus on driving industry projects to enable green finance.

Global FinTech Hackcelerator 2022

The theme for this year's Global FinTech Hackcelerator is "Harnessing Technology to Power Green Finance". 20 finalists, comprising FinTech firms and solution providers, have been shortlisted and will present their solutions at Demo Day at SFF.

On This Page

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  1. JOItmC

    blockchain in finance services or fintech research paper

  2. (PDF) Blockchain in FinTech: A Mapping Study

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  3. Implementation of Blockchain Technology in FinTech

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  4. Application of Blockchain technology in financial services

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  5. Frontiers

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  6. Blockchain is a Financial Technology Free Essay Example

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  1. Interview with EMCD (Mike Lvov)

  2. New blockchain network that pays you passive income (BLAST)

  3. Stefan Hyttfors on the Impact of Blockchain on Financial Services

  4. The future of Blockchain in Banking & Financial Services I Global Fintech Fest 2023

  5. Blockchain, Web 3.0, Digital Identity, and the Future of Finance

  6. Why Blockchain Will Shape The AI, Fintech, Social Media & IoT Industries


  1. A review of Blockchain Technology applications for financial services

    The primary research objectives of this paper are as under: ... Blockchain in financial services can thereby increase transparency in the process of investing in funds. [126], [127], ... The importance of fintech in the global financial system and its relationship to Blockchain will grow together. Because investors get more value for their ...

  2. Emerging advances of blockchain technology in finance: a content

    Traditional financial organizations and start-up companies are increasingly partnering with FinTech to provide user-friendly and cost-effective financial electronic services. Blockchain is a common FinTech that transforms how financial businesses operate, collaborate, and transact with their stakeholders . This suggests that the decentralized ...

  3. The Impact of Blockchain Adoption on Financial Performance in Fintech

    This paper focuses on Blockchain technology and its importance for financial services. Further takes up various tools, strategies, and featured services in Blockchain-based financial services.

  4. How Blockchain can impact financial services

    Blockchain attracts attention as an underlying technology for bitcoin and other cryptocurrencies (Nguyen, 2016) since it is seen as a new foundation for transactions in the world (Staples et al., 2017).A Blockchain is a continuous account database, which is complete, distributed and unalterable (Yoo, 2017).The most excellent value of Blockchain is a decentralized system, whose security chain ...

  5. The state of play of blockchain technology in the financial services

    This paper strives to close the current research gap pertaining to potential implications of the blockchain for the financial services sector by presenting a framework built on three factors, namely benefits, challenges and functions. These were used to derive research questions that are theory-based as well as relevant for the industry.

  6. A Survey of Blockchain Applications in the FinTech Sector

    Blockchain-based applications for the FinTech sector were motivated by the blockchain's decentralized potential for finance. In this paper, we study the three main categories of FinTech services [ 26 ]: Payments Services, Deposits and Lending, and finally, Investment Management Services.

  7. Blockchain Technology in Finance: A Literature Review

    Our study presents and intensifies the opportunities and constraints of the implementation of blockchain technology in finance around the world. The article presents the results of a systematic literature review on blockchain technology, as advanced in articles published between 2017 and 2021. In the course of reviewing the articles, we found ...

  8. (PDF) A Review of Blockchain in Fintech: Taxonomy ...

    The primary purpose of this paper is to bridge the technology gap between Blockchain and Fintech applications. Blockchain technology is already being explored in a wide number of Fintech sectors ...

  9. Blockchain technology in financial services: a comprehensive review of

    This study will help provide a holistic framework that would highlight the current state and challenges of the blockchain in the financial services sector.,The objective of this study is to systematically examine and organize the current body of research literature that either quantitatively or qualitatively explored the use of blockchain ...

  10. Blockchain in Financial Services: Current Status, Adoption Challenges

    Blockchain is undoubtedly considered one of the most innovative technologies in financial services from the past decade. Interests in blockchain technology continue to grow on a daily basis, while many promising blockchain-enabled applications and services continue to draw financial interest in the industrial sector and the broader financial services communities.

  11. Blockchain in Financial Services by Colleen Baker, Kevin Werbach

    Blockchain's promise for the industry lies in its potential to increase the efficiency of existing processes in the short term (dispensing with intermediaries and time-consuming administrative processes ), and to transform existing business models in the longer term. Baker, Colleen M. and Werbach, Kevin, Blockchain in Financial Services (2019).

  12. A review of Blockchain Technology applications for financial services

    Participants in the business network can now more easily collaborate, manage data, and agree with. this technology's application. 1. Introduction. Blockchain offers a decentralised system in ...

  13. A systematic review of blockchain

    Blockchain is considered by many to be a disruptive core technology. Although many researchers have realized the importance of blockchain, the research of blockchain is still in its infancy. Consequently, this study reviews the current academic research on blockchain, especially in the subject area of business and economics. Based on a systematic review of the literature retrieved from the Web ...

  14. Blockchain and supply chain finance: a critical literature review at

    In the current environment, where the Covid-19 pandemic has exposed the vulnerabilities of the incumbent paper-based trade and supply chain finance systems, digital transformation pledges to alleviate the friction on international trade. Here, we provide a timely review of state-of-the-art industry applications and theoretical perspectives on the use of blockchain as the medium toward ...

  15. Full article: The Future of Fintech

    View PDF View EPUB. Fintech is fast becoming a global phenomenon, led by innovators and followed closely by academics, and now drawing the attention of regulators. Broadly, fintech is an umbrella term for innovative technology-enabled financial services and the business models that accompany those services. In simpler terms, fintech can be used ...

  16. A Survey of Blockchain Applications in the FinTech Sector

    This research aims to direct the future of financial solutions by providing an outline of the applications of blockchain technology and distributed ledger technology (DLT) for FinTech. We discuss various implementations, limitations, and challenges of blockchain-based FinTech applications.

  17. PDF Fintech and the digital transformation of financial services

    BIS Papers No 117 Fintech and the digital transformation of financial services: implications for market structure and public policy by Erik Feyen, Jon Frost, Leonardo Gambacorta, Harish Natarajan and Matthew Saal Monetary and Economic Department July 2021 JEL classification: E51, G23, O31. Keywords: big tech, fintech, credit, financial markets,

  18. Blockchain in Finance: Impact on the Financial Services Industry

    How the Blockchain Will Impact the Financial Sector November 16, 2018 • 14 min read. The blockchain, a form of distributed ledger technology, has the potential to transform the financial sector ...

  19. Tokenized financial assets: Moving from pilot to scale

    Tokenization, the process of creating a unique digital representation of an asset on a blockchain network, has reached a tipping point after many years of promise and experimentation.The benefits—including programmability, composability, and enhanced transparency—can empower financial institutions to capture operational efficiencies, increase liquidity, and create new revenue opportunities ...

  20. (PDF) Blockchain in FinTech: A Mapping Study

    The paper conducts a mapping study on the research topics, limitations, gaps and future trends of blockchain in FinTech companies. A total of 49 papers from a scientific database (Web of Science ...

  21. Fintech and Digital Transformation of the Financial Industry

    P2P lending is more extensive in the region with more mobile phone subscriptions; outstanding balance of P2P lenders in region is negatively associated with the size of traditional banking sector; and the number of the P1P platforms in negatively related to the fixed assets investments in region, whereas average yield is positively associated withThe fixed assets Investments.

  22. Blockchain in banking and finance: A bibliometric review

    The number of publications per year during our sample period is reported in Fig. 1, where the X-axis shows the years from 2017 to 2021 1 and the Y-axis shows the number of published papers. The figure shows that the research output on blockchain in banking and finance increased year-over-year.

  23. Applied Sciences

    A Feature Paper should be a substantial original Article that involves several techniques or approaches, provides an outlook for future research directions and describes possible research applications. Feature papers are submitted upon individual invitation or recommendation by the scientific editors and must receive positive feedback from the ...

  24. Introduction to Fintech: A General Financial Technology Overview

    Financial Technology, or Fintech, refers to the innovative use of technology in the financial sector. This rapidly evolving field encompasses a wide range of applications, from digital payments to blockchain technology, fundamentally transforming how financial services are delivered and consumed. The fintech industry is expected to continue its exponential growth, with an estimated global ...

  25. A Survey of Blockchain Applications in the FinTech Sector

    chain, and cloud computing are a few technologies currently being applied to FinTech. In this paper, we consider FinTech, which partly uses blockchain technology. Blockchain technology plays a vit ...

  26. Comment on Digital Securities Sandbox Joint Bank of England and

    Re: Digital Securities Sandbox joint Bank of England and Financial Conduct Authority consultation paper. To Whom It May Concern: This joint proposal from the Bank of England and the Financial Conduct Authority (together, "the UK regulators") for a digital securities sandbox ("DSS") reflects a commendable commitment to incorporating innovation into the financial system.

  27. How Blockchain can impact financial services

    Align the organization's activities with Blockchain initiatives - The main activities of the financial department should be aligned with the decision to use Blockchain's solutions (research or real services or both). Indeed, if the companies do not specialize in banking investment, they should not take the risk to address this new market.

  28. Green FinTech

    Technology and Sustainability are the two key driving forces shaping the future of financial services. Accordingly, MAS has been actively promoting FinTech and Green Finance. The FinTech journey began in 2015 and Singapore is today often cited as one of the leading FinTech hubs in the world.

  29. A comprehensive review of blockchain technology ...

    In, [39] the potential of blockchain in the finance sector is discussed and compare the blockchain boom to the internet of 1989's and claimed that blockchain will have the same effect on banking and finance as the internet had on media. Despite its rising popularity blockchain technology has received mixed reviews from the research community.

  30. Fintech Blockchain Market: Projected to Exceed USD 57.84 Billion by

    WESTFORD, Mass., June 28, 2024 /PRNewswire/ -- According to SkyQuest, the global Fintech Blockchain Market size was valued at USD 2.2 billion in 2022 and is poised to grow from USD 3.16 billion in 2023 to USD 57.84 billion by 2031, growing at a CAGR of 43.8% in the forecast period (2024-2031). The ...