As blockchain technology builds a crucial role in the financial services sector, interest from other industries is on the rise.

As more and more businesses consider adopting blockchain, Grant Thornton has issued advice on deciding whether it is a suitable solution for your company, and how it can be implemented,

Michael Crowe, a Director at Grant Thornton in the Isle of Man, said: ‘Originally created as the technology to support digital currency “bitcoin”, blockchain has been seized upon by the financial services sector, where it is playing a crucial role in tracking and authenticating transactions. Obviously, the financial services application has relevance here in the Isle of Man because of the size of that sector, but there may be other industries considering blockchain.

‘However, while the hype around blockchain may suggest it can be applied to any business, it isn’t always a suitable solution. So how do you ensure it is a viable option for your business and that it can truly add competitive advantage? And how do you implement it?

‘Luis Pastor, IT consulting and innovation partner at Grant Thornton Spain, has been examining the growth of blockchain and has broken down these considerations into three key stages.

‘Firstly there is training. This stage is about obtaining hands-on experience of how blockchain works, where it can be applied and how to leverage it, often through case histories. Next is diagnosis of the cost and benefits of using blockchain. Doing this in the context of a business case is also vital, not least because adopting new technologies will likely involve the replacing of a legacy system or generating a new business model. Finally, the development stage, which will require you to understand which is the right solution for you. Right now, there are no one-off “plug-and-play” products on the market, so every solution must be tailor-made.’

Mr Crowe added: ‘Of course, as Luis observes, this process is not straightforward and you will likely face many challenges along the way. Implementing a change programme of this magnitude is time-consuming. With blockchain, once a protocol is developed, you must be prepared to go back and forth to fine tune the product. And because blockchain as a concept is still evolving, new advances are emerging all the time.

‘He also identifies there are other industry-related challenges to consider, such as sector-specific laws and government regulations. For industry-wide projects, it’s always best to bring in the regulators from the beginning. Although interest from early adopters such as China, Estonia, India, Singapore and the UK is particularly strong, many governments and regulators aren’t ready for blockchain and in those cases we have to find a solution without them.

‘All of this means collaboration with experts and a willingness to ‘test and adapt’ is a must.
Blockchain will create huge disruption in many sectors and, potentially, see some firms leave the market. But by bringing in the right expertise and adopting a collaborative approach, it might also be the technology that will help you to steal a march on your competitors.’

In 2015, nine of the largest investment banks in the world were exploring common standards for blockchain technology in an effort to broaden its use across the sector and many financial organisations have since joined them, forming a consortium of 45 businesses focused on the research and development of blockchain use in the financial system.

Simon Taylor, vice president of blockchain R&D at Barclays, has described the technology's ability to provide a continuously growing list of records, secure from tampering and revision, as ‘a fabric for financial services – a book and records for the world’; the financial sector clearly sees opportunity in the adoption of blockchain and a recent survey by Greenwich Associates suggests it is yet to peak, with an estimated US$1 billion being invested by the financial and technology markets this year.

Examples of the advantages to other industries are already beginning to emerge, such as the health sector where blockchain is being considered as a solution to the counterfeiting of drugs. The creation of a decentralised database of medical records, which would give patients more control over their personal data, is also being explored.

Australian energy supply company PowerLedger believes blockchain can help businesses directly deliver a benefit to customers, enhancing the customer experience, improving loyalty and, ultimately, driving profits. It has adopted a blockchain-secure ledger to empower residents on the country’s west coast, which has 300-plus days of sunshine every year, to trade excess energy generated by their solar panels. They will be able to buy, sell or swap excess solar energy with anyone connected to the Western Power network.

Mr Crowe said: ‘Our Isle of Man firm is able to draw on the expertise and research of our international colleagues to be able to deliver our clients well-considered advice on a wide range of topics. If any Island business feels it could benefit from our advice in this area, I’d encourage them to get in touch.’

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