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‘Vibrant’ British blockchain sector to benefit UK business

The most in-depth market research report to date mapping the UK’s distributed ledger technologies (DLT) landscape has revealed the potential of this nascent technology to disrupt industries across the country.

New research from Digital Catapult, an advanced digital innovation centre, discovered an ecosystem active across a wide range of sectors, with British companies at different stages of development and numerous industry-spanning applications to help lower costs, enable more efficient public services and improve supply chain traceability.

The report asserts that the UK became globally recognised as a leader in DLT in 2015, but that since then rapid changes have seen the UK’s early lead potentially slip behind China, Singapore, Malta and the USA, countries which have been more agile in their approach to DLT pioneers.

The new research report, ‘Blockchain in Action: State of the UK Market’, surveyed over 260 UK DLT companies, gathering concrete data on the breadth of the ecosystem. It highlights the opportunities from adopting blockchain and other DLT, as well as identifying the major challenges which must be addressed if the UK is to benefit from this high-potential technology.

Key findings include:

  • The UK’s DLT ecosystem can be divided into four major categories: distributed ledger developers (13%), dApp developers (35%), service providers (37%), and centralised systems (15%).
  • DLT is not confined to the financial services sector – the companies we spoke to are active across a wide range of sectors from manufacturing to the creative industries
  • 38% of the companies interviewed feel that their technology could be applied to all vertical markets, not just FinTech
  • 74% of DLT companies have products ready to demonstrate and are already generating revenue
  • 80% had used personal funds to start their companies, and are often led by mature business leaders using their own money to found the company.
  • 41% had raised a traditional seed round of investment
  • 25% were not currently seeking investment
  • 74% of companies expressed regulatory uncertainty as their most pressing challenge, with the irreconcilability of GDPR with permissionless, public blockchain development and a lack of clarity around ICO regulation quoted as key concerns.
  • Over half (54%) of companies have struggled to open a UK bank account with several resorting to opening multiple accounts around the world
  • Almost half (45%) of companies consulted required additional specialist legal advice to bring their companies to fruition. Many are concerned that lawyers do not understand the intricacies of the technology and believe they have received poor advice around ICOs and intellectual property protection.

The report was launched alongside DLT Field Labs, a new initiative from Digital Catapult that brings together technology businesses, industry partners and researchers to deploy and test the latest distributed ledger technology in real world (and close to real world) environments.

It says DLT companies are grappling with an unclear and fragmented regulatory landscape, amid damaging preconceptions about the viability of their sector and lack of authoritative legal advice. As such, the first DLT Field Labs will look at barriers in the construction industry that blockchain and other DLT solutions could help to overcome.

Jeremy Silver, CEO, Digital Catapult, said: “Digital Catapult is taking an active step to improve understanding of DLT in multiple sectors for the wider benefit of the UK economy. To do that, and encourage further adoption of this technology, we must dispel the myths, cut through the hype, and educate organisations outside of the financial services sector to the varied applications of DLT and how we can help them to de-risk innovation.”

Law firm Mishcon de Reya has signed up as a lead sponsor for the DLT Field Labs initiative. Dr Alastair Moore, Head of Analytics and Machine Learning, said: “We’re thrilled to support Digital Catapult in its exploration of the practical applications of blockchain and other distributed ledger technologies, not just in the legal profession but throughout any number of industries where there is opportunity for impact. Our hope is that by being a part of the DLT Field Labs we can help to accelerate the use and comprehension of DLT in our industry and, ultimately, provide better advice to enable UK DLT companies to fulfil their potential.”

FMCG retailers ‘not measuring supply chain sustainability KPIs’

New research has found supply chain sustainability is a top priority among FMCG retailers, but many aren’t formally measuring KPIs.

According to research from iPoint BiS, more than three quarters of firms (77%) have a clear plan and vision for supply chain sustainability.

However, 40% do not have formal KPIs and 55% said they only have informal measurement metrics.

Only 8% of firms have met their supply chain sustainability plan because of perceived time and effort.

While 41% of managers believe getting supply chain sustainability right will save money.

1 in 3 see supply chain sustainability as protecting against reputational damage. The same number see it as meeting stakeholder expectations.

The survey questioned 250 US and UK supply chain decision-makers and found that while 77 per cent consider supply chain sustainability a strategic priority with a clear plan and vision, 92 per cent of firms are falling behind on their commitment due to perceived time and effort.

The research looked at supply chain sustainability drivers and unsurprisingly found that cost saving is the number one goal amongst managers when creating a sustainable supply chain with 41 per cent citing it. This was well above 31 per cent looking to reduce environmental impact.

In the USA, managers are much more concerned about protecting against reputational damage, with 40 per cent more managers citing it as a sustainability goal in the USA compared to the UK.

Among the reasons given for barriers to implementing a sustainable strategy, 44 per cent say it’s because of the time and effort required, and 43 per cent say it’s difficult to prove the business case. Firms realise that sustainability is important but are finding it difficult or time-consuming to implement.

Despite increasing regulatory pressure and the acknowledgement that sustainability is a key priority, less than half of businesses have a formal measurement of the environmental impacts of their supply chain and track progress towards their sustainability goals.

Joerg Walden, CEO of the iPoint Group, said: “More than ever before, organisations are facing increased demands for insight into their social and environmental performance. CSR or Environmental Social and Governance (ESG) data is no longer just a compliance or financial issue, it has become a social issue where stakeholders, including the public, take an interest in an organization’s CSR or ESG reports. It’s clear from our research that enterprise understands this, but the evidence points to the fact that there is a long way to go before the benefits of sustainability are realized through proper measurement.”

Oliver Mueller, Co-Founder and CEO of iPoint BiS, added: “We live in an era where data can deliver easily trackable progress and actionable insights for decisions and improvements in real time. EHS and sustainability need solid reporting to make a measurable difference and to prove the business case. More than this, EHS and sustainability can rise above organisational boundaries by providing complete transparency into organisational and supply chain relationships through automation, turning sustainability into a business advantage and easily proving the business case.”

Blockchain set to ‘supercharge global supply chains’ by 2025

Blockchain could become ubiquitous by 2025, entering mainstream business and underpinning supply chains worldwide, according to a new report from Capgemini.

The study asserts that the distributed ledger technology will dominate manufacturing as well as consumer products and retail industries, ‘ushering in a new era of transparency and trust’.

Currently, just 3% of organisations that are deploying blockchain do so at scale and 10% have a pilot in place, with 87% of respondents reporting to be in the early stages of experimentation with blockchain.

The UK (22%) and France (17%) currently lead the way with at-scale and pilot implementation[1] of blockchain in Europe, while the USA (18%) is a front-runner in terms of funding blockchain initiatives.

These “pacesetters”[2] are optimistic that blockchain will deliver on its potential, with over 60% believing that blockchain is already transforming the way they collaborate with their partners.

The study also found that cost saving (89%), enhanced traceability (81%) and enhanced transparency (79%) are the top three drivers behind current investments in blockchain.

Furthermore, blockchain enables information to be delivered securely, faster and more transparently. The technology can be applied to critical supply chain functions, from tracking production to monitoring food-chains and ensuring regulatory compliance. Enthused by the results they are seeing, the pacesetters identified in the study are set to grow their blockchain investment by 30% in the next three years.

Despite the optimism surrounding blockchain deployments, concerns remain around establishing a clear return-on-investment, and interoperability between partners in a supply chain.

The majority (92%) of pacesetters point to establishing ROI as the greatest challenge to adoption, and 80% cite interoperability with legacy systems as a major operational challenge. Additionally, 82% point to the security of transactions as inhibiting partner adoption of their blockchain applications, undermining blockchain’s status as a secure technology.

Sudhir Pai, Chief Technology Officer for Financial Services at Capgemini, said: “There are some really exciting use cases in the marketplace that are showing the benefits of blockchain for improving the supply chain, but blockchain is not a silver bullet solution for an organisation’s supply chain challenges. Blockchain’s ROI has not yet been quantified, and business models and processes will need to be redesigned for its adoption. Effective partnerships are needed across the supply chain to build an ecosystem-based blockchain strategy, integrated with broader technology deployments, to ensure that it can realise its potential.”

In a previous report[3] conducted earlier this year with Swinburne University of Technology in Australia, Capgemini found that experimentation in blockchain will peak in 2020 as organisations explore proofs of concept and branch out from Fintechs.

According to the report, blockchain transformation will mature in 2025 as organisations undertake enterprise transformation and integration, establishing policies for privacy and data management.

A copy of the report can be downloaded here.