Financial Services Blog

Like any emerging technology, blockchain has limitations, making it less appropriate for some applications, or meaning more investment is required for certain use cases.

Some of the major challenges, with recommendations for improvement, are:

Performance issues:

  • Design better algorithms to allocate calculations to various nodes (rather than all nodes performing all computations).
  • Capture greater value from technology used to create the blockchain ecosystem.
  • Standardize data feeds (internal and external).

Privacy and confidentiality (based on existing approaches):

  • Implement robust encryption.
  • Selectively replicate information.
  • Use off chain logic execution, where possible.
  • Regulate usages where transparency is a must.

Complexity of contracts:

  • Standardize contract types.
  • Design algorithms to align processing requirements with frequency of modification.
  • Create balance between functions and complexity.
  • Evolve version control and contract types.

Redacting and archiving historic information:

  • Use Accenture’s editable blockchain, which allows data redaction or archival by authorized administrators, under strict governance and protocols.

The regulatory aspect

Regulators do not want to force standards on the industry or impinge on innovation, though an industry standard may be required in financial institutions’ use of blockchain. The Financial Conduct Authority, along with the Bank of England, are using “regulatory sandboxes” to give regulatory feedback to institutions offering innovative financial products and services based on blockchain. The European Union’s PSD21 (Revised Payment Services Directive) due in 2018 should be a significant catalyst for larger banks’ involvement.

The European Securities and Markets Authority (ESMA) published a report on January 7, 2017, regarding the regulatory involvement with blockchain.  ESMA noted it is premature to fully appreciate the changes that the technology could bring (and the regulatory response that may be needed), given that the technology is still evolving and practical applications are limited both in number and scope.2

EMSA should continue to monitor blockchain market development and assess when a regulatory response is required. ESMA believes the industry should work toward solutions to the issues posed by technology and should address key areas of concern for adoption of blockchain technologies by financial services institutions such as interoperability, use of common standards, and access to central bank money, governance, privacy and scalability.3

Regulators should also take steps so that new systems have adequate processes in place to carry out due diligence checks. As such, blockchain’s immutability may pose a challenge for permissioned systems. A potential solution, Accenture’s patent-pending blockchain redaction capability, can address this challenge by allowing designated administrators to edit, redact and remove blocks of information, and thus permitting sufficient measures and controls are in place for the General Data Protection Regulation (GDPR) “right to be forgotten” human errors and illegal actions undertaken by system users.

What’s ahead?

In this series, we’ve explored the pros and cons of financial institutions adopting blockchain. Now it’s time to look forward. What’s our outlook for the technology?

We expect financial institutions’ early adoption of blockchain solutions to continue, as the technology’s benefits begin to materialize. Based on the work we do with clients and our research, Accenture projects ­, blockchain systems should help reduce or eliminate many points of friction for a variety of transactions.4

Individuals and companies should be able to exchange a wide range of digitized or digitally represented assets and value with confidence.

We believe the initial drive should come from internal implementations. In Accenture’s experience, it is relatively easy to set up an internal blockchain, thus speeding the realization of benefits.

By contrast, market-wide and consortium-type implementations often require further collaboration and prototyping between various organizations, as well as the evolution of the regulatory framework. The next 6-8 years are expected to be a growth stage for blockchain. Successful large-scale adoption of the technology is anticipated, after which it is expected to enter a maturity state.

Accenture is uniquely positioned to connect financial services institutions, technology partners and regulators to identify and implement viable and disruptive blockchain use cases that deliver the most value to their stakeholders.


1 “Payment services (PSD 2) – Directive (EU) 2015/2366,” European Commission. Access at:

2 “The Distributed Ledger Technology Applied to Securities Markets,” European Securities and Markets Authority, Report. Access at:

3 Ibid

4 “Accenture Technology Vision 2018,” Access at:

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