For now, real-life use of blockchain technology is still limited. Its current use is mostly to be seen in the bitcoins— virtual currency created with blockchain technology—that cross borders with negligible regulation. Incumbent banks, asset managers, insurers and technology firms are keen to experiment with the new technology. Their initial trials focus on niche areas of trade finance, payment settlements and reconciliation. While interest in applying the technology is growing, widespread implementation may take years. An all-encompassing financial blockchain is unlikely to emerge from current projects. Yet the financial industry already has a consistent view of what needs to be done to put private specialist blockchains to good use. Here are some of the likely main features of the future use of blockchain in the global financial services industry:

• Closed systems: Collaborative blockchain networks will be closed to outsiders, to ensure that information does not land in the wrong hands and to prevent hackers from disrupting financial stability.
• Back office first: The first objective for introducing blockchain technology will be to save costs. Blockchain will cut the cost of the daily checking and rechecking of ownership and transactions.
• Regulatory overhaul: Financial industry rules may need a worldwide update, along with reforms to broader data protection regulation. Regulators want to encourage innovation but without upsetting stability.
• Emergency markets: The first widespread changes to retail financial services involving blockchain may take place in emerging markets, where banking, investment and insurance penetration rates are low.
• Less reliance on cash: Widespread use of blockchain technology, together with updates to compliance regulations, will enable central banks to substitute their own regulated, blockchain-based digital currencies for notes and coins. Some central banks, such as the Bank of England and the central bank of Norway, are already discussing discontinuing use of notes and coins entirely.
• Smarter financies: Within 10 to 20 years, embedded smart contracts could transform how bank accounts work and how insurance pays out.
• SME boost: Blockchain could help open up cheaper, non-bank financing to small and midsized firms, which provide two thirds of all jobs in Europe.