Despite Positive Outlook, New Research from State Street Reveals Asset Owners, Managers Lack Readiness for Blockchain

New research from State Street Corporation (NYSE:STT) on blockchain, the distributed ledger that maintains a continuously growing list of data records hardened against tampering and revision, unveils that while a majority of asset owners and asset managers (57 percent) expect it to be widely adopted in the investment industry in the next five years, only seven percent currently have initiatives underway to support it.

The survey, conducted in partnership with Oxford Economics, found that 74 percent of asset owners say they believe blockchain will achieve the scale needed for adoption compared to only 42 percent of asset managers. Despite asset owners’ optimism, 48 percent said they don’t know enough about it, and asset managers are even less confident, with 78 percent noting that they need more education.

“A majority of institutional investors are well aware that blockchain, an ‘emerging technology,’ could become an everyday application in the near future,” said Antoine Shagoury, global chief information officer at State Street. “What’s clear from our research is a lack of readiness and uncertainty for how to best plan for this disruption, and a need for more education.”

Additional survey findings include:

• IT and investment teams will be most affected:
  The majority of respondents (80%) agree that blockchain will have the greatest impact on IT departments, demonstrating that institutions recognize the need to introduce talent with the skills necessary to adapt to new technical demands. Additionally, 81% of asset managers agree that the adoption of blockchain will equally disrupt their own jobs on investments teams.
• Security represents the biggest concern:
  While cryptography is a core component of the blockchain infrastructure, nine-out of-10 respondents worry about how security implementation in blockchain will address existing and future requirements, an issue that the industry needs to tackle in order for wide-scale adoption.
• The private use will trump public adoption:
  Regardless of industry-wide adoption, more than half of asset owners and asset managers (55%) are convinced that blockchain is most likely to be used privately by companies with their clients. Only 13% believe blockchain will be used broadly by the public.

“We’re excited by the opportunity blockchain presents and are working to make it a tangible reality for our businesses, partners and clients,” said Hu Liang, senior managing director and head of State Street’s Emerging Technologies Center. “We are actively supporting several blockchain and blockchain-inspired initiatives both internally and as part of a handful of consortia of the world's biggest banks and technology companies.”

About This Research

The survey, commissioned by State Street and conducted by Oxford Economics, was comprised of respondents from 50 asset owners and 50 asset managers, inclusive of asset management firms, private pension funds or retirement funds, and public pension and retirement funds. Forty percent of respondents were from North America, while 30 percent were from EMEA and 30 percent were from APAC. Results are as of January 2016.

About State Street

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $27 trillion in assets under custody and administration and $2 trillion* in assets under management as of March 31, 2016, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.

* Assets under management include approximately $32.6 billion as of March 31, 2016, for which State Street Global Markets, LLC, an affiliate of SSGA, serves as the marketing agent.

State Street Corporation One Lincoln Street, Boston, MA 02111-2900.

© 2016 State Street Corporation - All Rights Reserved

Expiration Date - 05/31/2017

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