A new report from leading financial research firm East & Partners in partnership with Payments Cards & mobile, claims banks are lagging far behind their clients’ expectations when it comes to implementing new products and solutions that use blockchain, crypto and Distributed Ledger Technologies (DLT).

The report surveyed almost 900 C-suite treasury executives from leading companies in the world’s major economies.

It found that trade finance, cross-border payments and cash management functions are key priorities for the implementation of blockchain and DLT solutions.

These areas have long been problematic for big companies, with persistently high costs, slow settlement times and poor transparency from partners.

“Perceived barriers to setting up blockchain solutions include a lack of connected partners, high set-up costs and low levels of support from banking partners.”

Company CFOs are looking for blockchain/DLT to improve transaction security, speed up settlement and reduce costs.

Perceived barriers to setting up blockchain solutions include a lack of connected partners, high set-up costs and low levels of support from banking partners.

Further concerns include exposure to cyber risk and fraud through the introduction of blockchain solutions.

It is clear that banks must do more to service their clients in both advisory and executional capacities when it comes to DLT/blockchain.

Blockchain: benefits outweigh challenges

Alongside the perceived benefits, concerns about competitive disadvantage and fear of being left behind are seen as key drivers for the implementation of blockchain solutions, alongside growing worries about the increasing cost of maintaining legacy technology platforms and systems.

77 percent of companies say that blockchain implementations are either a high or medium priority for their corporate treasury team.

Companies are concerned about the ongoing volatility of “classic” crypto, and that investments in acceptance and transaction solutions for crypto might prejudice their existing investments in fiat systems.

As a result, global corporates are looking for more and better regulation that will secure crypto exchanges and protect them from cyber risks and fraud.

“The advent of Central Bank Digital Currencies (CBDCs) will drive massive adoption of blockchain systems in the next 3-5 years and banks should be doing more to prepare for this.”

The report says that the advent of Central Bank Digital Currencies, or CBDCs, will drive massive adoption of blockchain systems in the next 3-5 years and banks should be doing more to prepare for this.

According to East and Partners/Payments Cards & Mobile, most corporate treasury teams are unaware of their banking partner’s offerings in blockchain, DLT and CBDCs.

Specific areas in which companies are looking for advice include the automation of treasury functions, how to achieve better real-time visibility of funds and improve cross-border transactions (reduce cost, better transparency, faster settlement.)

The authors report that understanding of CBDCs and stablecoins, how they function, and their benefits was markedly higher among major corporate treasurers compared to their understanding of crypto and blockchain.

Whereas appreciation for the benefits of blockchain is highest in China, Hong Kong and Singapore, the benefits of stablecoins and CBDCs are also appreciated in North America and Western Europe.

In part, this can be explained by the success of stablecoins such as USD Coin and Tether in the US, and widely-communicated plans for CBDCs on the part of European Central Banks.

However, corporates still feel they lack support from their bank when it comes to the implications of both stablecoins and CBDCs.

“Major corporates feel they lack support from their bank when it comes to the implications of both stablecoins and CBDCs.”

Corporates expect CBDCs and stablecoins to reduce counterparty risk, cut cash handling costs and smooth their liquidity challenges.

They intend to prioritise the implementation of CBDCs and stablecoins in trade finance and cross-border payments, areas in which they have experienced long-standing challenges.