Strategic effects of Distributed Ledger Technology on banking sector in Finland

Abstract

Since 2007, the Finnish banking sector has undergone a transformation that has been affected by economic fluctuations, tightening regulation and digitalisation. A new technology architecture solution, Distributed Ledger Technology has emerged since and received a lot of attention. Technology has been described as the biggest revolution since the commercialization of internet. Distributed Ledger Technology have been expected to be highly disruptive especially in the banking sector. The aim of this study is to outline the effects of Distributed Ledger Technology on the Finnish banking sector and its future development. The research is empirical and uses the qualitative Delphi research method to outline the future of the banking industry. The research approaches Distributed Ledger Technology as well as its implications through Christensen’s Disruptive Innovation Theory. The study presents the different definitions for the Distributed Ledger Technology and emphasizes the lack of a coherent universal definition, which complicates the research of the technology. According to the study, Distributed Ledger Technology has major implications for the future development of the Finnish banking sector. The technology is introduced to influence the development of market structure and competition environment, as well as drive banks to review their business models as traditional revenue streams in banking sector are expected to change. The technology is proposed to improve efficiency and change cost structures of banks and thus have a direct strategic impact on the operators in the Finnish banking sector over the next decade.