Financial Services

Unlocking Economic Advantage with Blockchain in Financial Services

The global financial services industry currently spends about $1.7 billion annually on distributed ledger technology, according to a recently published report from US researcher, Greenwich Associates, with spending on blockchain increasing year-on-year by almost 70%.

We have been talking blockchain with a number of financial services thought leaders all around the world. It’s encouraging to see so much interest in the topic – and to learn how companies are starting to put blockchain to use. Per a recent article in the American Banker some of the world’s largest banks such as Santander, ING, HSBC, Goldman Sachs. JP Morgan Chase, Bank of Montreal, Mitsubishi UFJ Financial etc. are making large investments in assorted initiatives involving distributed ledger technology. By adopting blockchain, the global banking industry could save as much as $20 billion by 2022, according to the management consulting firm Accenture.

In a recent report from the World Economic Forum, it was estimated that Blockchain technologies could reduce the current trade finance gap currently set to grow to $2.4 trillion by 2025, by $1 trillion.

However, uptake is still slow, and the financial industry is not close to widespread adoption of blockchain technology. So, what will it take for blockchain to really take off in our industry? From our perspective, blockchain needs to deliver in five key areas before it will see wider adoption in financial services:

1 – Multi-cloud distributed trust of data

Most current blockchain solutions are hosted by a single cloud provider, even when distributed across multiple data centers. But blockchain’s overriding value proposition is that it offers distributed trust of data on a potentially massive scale. By definition, you won’t see that in any solution limited to a single cloud.

2 – Multi-blockchain

Customers also don’t want to get locked into a single cloud provider for reasons of both cost and flexibility. Even if they pick one blockchain solution to run themselves, they need to be able to manage and secure other blockchains inside their main environment. Most current solutions can’t offer that.

3 – Robust day two operation

A lot of blockchain solutions sell you on easy installation and configuration and then leave you to fend for yourself. To be financial services-ready, though, blockchains must provide robust tools for operational visualization and auditing. Without that, even the best solution won’t make it past the risk department.

4 – Data sovereignty and management

Financial data flows are bound by complex webs of international agreements and laws. Blockchain for financial services won’t take off until solutions feature tools that accurately tell you where your data is, where it has been, and who has touched it.

5 – Sustainable operation at scale

This is the biggest issue of all. Blockchains for financial services must be able to massively scale the transactions they process, the nodes they write to, and the speed at which they complete a transaction. Yet proof-of-work and proof-of-stake systems like Bitcoin and Ethereum run more slowly the larger they get. They are also economically and environmentally unsustainable: Bitcoin currently requires 1,000 kilowatt hours of electricity to process a single transaction.  To put that in perspective, that’s enough energy to power my five-member household for a month.

These five requirements are more than a wish list. They are driving our blockchain development strategy at VMware and we are in the process of building a trusted, multi-cloud blockchain solution

  • with over 4,000 cloud partners
  • that manages and secures not only VMware’s own blockchain offering but also Hyperledger and Quorum among others
  • that is auditable and operationally mature
  • that lets you control your data as needed
  • and that is truly scalable in a sustainable way.

VMware Blockchain also draws on VMware’s core competencies in solving distributed management and security problems. As we do for other high-trust, large scale challenges, we:

  • process our customer’s data efficiently and securely
  • protect and manage their data in flight
  • protect and manage their data at rest
  • protect and manage their user’s access to data

With the VMware Blockchain solution in place, we foresee variety of powerful use cases. These include secure financial data sharing; asset tracking for foreign exchange and anti-money laundering; asset transfer in payments and deed transfers and recording; and verifiable claims for customer verification, background checks, and digital voting.

You can get an insight into our solution by checking out a paper we recently published titled Fighting Fraud in Financial Services? How Blockchain Can Help.”

It surveys the prevalence of fraudulent practices across the modern financial services landscape and explains how VMware Blockchain is being designed to address them.

You can also contact us direct at or find us at

Mike DiPetrillo is Senior Director for Blockchain Technologies at VMware

Manasee Dash is Global Lead of Financial Services Product Marketing and Solutions at VMware


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