IDC forecasts 84 pc growth in demand for blockchain in APAC
UNTIL recently, it seemed as though companies struggled to understand blockchain, think of its use cases, and move from pilot projects to full-scale enterprise-wide deployments.
That was last year. In 2019, it seems as though things have suddenly changed. Companies in the utilities and power management space, real estate, and financial services, among others, are really starting to capitalize on this technology.
“After much experimentation, this technology is beginning to emerge in a range of production environments driven by the thought leadership of early adopters and an ever-growing industry of blockchain businesses helping their customers realize the value of this technology,” said IDC Vice President for Security and Blockchain Research Simon Piff.
According to a new report from IDC, companies in the APAC will spend nearly US$523.8 million on blockchain solutions this year, an increase of 83.9 percent from the Us$284.8 million spent last year.
IDC forecasts blockchain spending in APEJ to grow at a robust pace over the 2018-2022 forecast period with a five-year compound annual growth rate (CAGR) of 77.5% and total spending of USD 2.4 billion by 2022.
Given the recent news that JP Morgan has created its own coin and is doing a great deal more with blockchain, and announcements from various central banks around the world centered on blockchain technology, it’s safe to say that blockchain is getting a fair deal of attention in the world of financial services now.
From the financial sector’s perspective, IDC sees banking, securities and investment services, and insurance industries will invest US$294.8 million combined in blockchain solutions this year.
Trade finance & post trade/transaction settlements and cross border payments & settlements are the two blockchain use cases that will receive the most investment (US$82.1 million and US$79.0 million, respectively) this year. The banking industry will be the largest investor for both these use cases.
“Blockchain that emerged out of the financial sector is more well-established in this vertical industry. The financial sector accounts for about half of the spend, throughout the forecast period,” said IDC Senior Research Manager for Customer Insights and Analysis Ashutosh Bisht.
The manufacturing and resources sector, driven by the discrete and process manufacturing industries, and the distribution and services sector, led by the retail and professional services industries, are forecast to see blockchain spending of US$95.0 million and US$90.6 million respectively this year.
Manufacturing will focus much of its blockchain investment in LoT lineage/provenance as well as trade finance & post trade/transaction settlements use cases.
On the other hand, regulatory compliance use cases will receive significant investments from the finance sector followed by manufacturing.
The infrastructure sector will see the fastest growth in blockchain spending over the 2018-2022 forecast with a five-year CAGR of 99.6 percent, followed closely by the distribution and services sector with a CAGR of 83 percent.
At the end of the day, strong ROIs from use cases have created strong interest in blockchain solutions in the market, as demonstrated by IDC’s spending forecasts.
However, companies investing in blockchain solutions must remember that while transparency and immutability are good starting points, the key to getting blockchain right is to know that the technology isn’t the solution all of its problems.