Introduction

Blockchain is currently one of the most exciting technological developments in the BFSI industry and is rapidly gaining traction due to a rich ecosystem of startups, technology majors, and investments by consortiums & leading financial services enterprises. In our previous research report, “Blockchain in BFSI: Looking beyond the Hype”, we presented a fact-based assessment of the state of the market, detailing investments made by participants such as financial services companies, technology companies, and FinTech startups. This was done with the aim to identify the opportunities, challenges, and key success factors for BFSI enterprises looking to leverage blockchain technology. In this report, we do a deep dive into smart contracts technology. We believe that smart contracts on blockchain will bring many of the benefits of blockchain technology to fore by reducing costs of transactions and infrastructure while driving efficiencies, financial inclusion, reducing risks, automating processes, and creating new business models.

Financial enterprises and FinTech are exploring the use of smart contracts for various use cases across the BFSI value chain. Currently, the prototypes developed have primarily been a simplified version of a smart contract, which is still in early stages of maturity, however, we expect to see enterprise-grade smart contracts being developed in the next 12 to 18 months (by early 2018). Few of the key areas where there is a lot of work to be done are legal and regulatory compliance, ensuring scalability & security, and the ability to code complex contracts that dominate the financial services landscape.

In this report, we attempt to define smart contracts, explore use cases, and understand some of the benefits of this technology.

This report also deep dives into use cases for smart contracts beyond the BFSI sector in areas such as smart power grids, rewards & loyalty, voting & identity management, and digital rights management.

Contents

The contents of this report are the result of a comprehensive study featuring online sources and literary works, as well as our interactions with service providers and enterprises. The aim is to identify the opportunities, challenges, and key success factors for BFSI enterprises looking to leverage the smart contracts technology. The research also captures evolving trends, market dynamics, and emerging priorities of enterprises.

In this research, we analyze the current trends and the future outlook of smart contracts technology on the global BFSI sector. We focus on:

• Market trends and activity for smart contracts technology
• Definition and components of a smart contract
• Smart contracts value chain
• Classification of smart contracts
• Use cases for smart contracts
• Priorities of BFSI enterprises and key investment themes
• Future outlook and how enterprises can drive faster adoption of the technology

Note: In this report we use “blockchain” to refer to any form of distributed ledger technology that can store encrypted transactions and maintain trust through any form of consensus mechanisms. Whenever we need to refer to the blockchain platform for the Bitcoin currency, we refer to it as the “Bitcoin blockchain”.