Blockchain-Based Contracts Replace Traditional Contracts

Blockchain-based Contracts Replace Traditional Contracts

PwC study: in the long term, automated contracts based on blockchain are likely to become the standard in the financial industry.

As the PricewaterhouseCoopers (PwC) study revealed, 52 percent of the 100 IT decision-makers surveyed in the financial sector intend to introduce smart contracts in the short to medium term. Smart contracts can be used to speed up business processes, make them more effective, and achieve savings by storing contract terms electronically on a blockchain, executing them automatically, and monitoring them. Combined with AI, tariffs or clauses can be adjusted promptly and flexibly depending on the risk or data situation.

Reliable, secure, transparent

All of the IT decision-makers surveyed stated that the smart contracts they already use function reliably. Ninety-five percent of respondents named cyber security and transparency as further advantages of automated, self-executing contracts.

84 percent of users want to increase their revenues with the help of smart contracts. Fifty-three percent hope to save money. Another 74 percent use smart contracts to achieve their sustainability goals.

Smart contracts are already being used most frequently in the financial sector to digitize transaction networks (68 percent), for new digital business models (58 percent) and in peer-to-peer payments (58 percent). Sixty-seven percent of respondents who plan to implement want to combine smart contracts with artificial intelligence (AI), and 64 percent plan to use them in sustainable or decentralized finance (DeFi).

Blockchain expert wanted

So far, only 19 percent of the service providers surveyed are using smart contracts. The main reason: according to 77 percent, there is a lack of specialists to implement the complex applications and integrate them into business processes. Another 74 percent cite the assessment of legal security as a major inhibition.

73 percent see the guarantee of data protection as a challenge. Yet the compliance of a contract with the General Data Protection Regulation (GDPR) can be guaranteed technologically: “Zero-knowledge proofs integrated into blockchain platforms enable financial service providers to verify sensitive information of their customers while complying with data protection,” says Dimitri Gross, Director Financial Service Technology at PwC Germany.