PriceWaterhouseCoopers enters the race to commercialize the blockchain

PriceWaterhouseCooper (PwC) recently announced that they have recruited 15 leading technology specialists “to exploit and commercialise blockchain, the technology that powers the crypto-currency, Bitcoin.”

PwC is a multinational professional services network headquartered in London, with offices in 157 countries and more than 200,000 employees. The firm generated US$35.4 billion in global revenue during 2015, making it the largest professional services firm in the world.

The UK office is the second largest in the group, with revenue of US$4.1 billion for the financial year ending 30 June 2015. The US office is the group’s largest firm, posting revenues of US$12.2 billion.

Formed in 1998 by a merger between two major accounting firms Coopers & Lybrand and Price Waterhouse, today PwC is one of the ‘Big Four’ auditors, along with Deloitte, Ernst & Young, and KPMG. Of the big four firms, PwC is the second to enter the blockchain space, Deloitte announced in July of last year that they’ve entered the blockchain arena with their initiative Rubix.

PWC expects to employ a further 35 digital and technology specialists for the “blockchain team,” during 2016. The recruits will also be based in UK, in the heart of Belfast’s business district, where they currently advise 80 of Northern Ireland’s Top 100 companies.

“Now there is growing interest and a real demand from our clients to help understand the implications of blockchain and how to respond to it. So, as the blockchain juggernaut continues to gather pace, PwC will be well placed to service our clients’ needs at a global level.”

• Steve Davies, PwC Partner and Fintech Leader

PwC is “breaking new ground in developing radical FinTech solutions,” Davies stated when he announced the Blockchain team. “These appointments represent the first stage of our plans to grow a world-class Fintech offering.”

According to PwC, the impact of Blockchain technology is still underestimated by many in the financial services industry. PwC UK Consulting leader and member of Executive Board, Ashley Unwin, explained that “blockchain technology is worrying major players in the financial services industry as they don’t know where it will go or its potential to disrupt business models.”

However, Unwin believes the blockchain technology “could be the single greatest advance in the FinTech sector in a decade.” Among the stated benefits are document delivery and settlement processing, which “will offer significant cost reduction and efficiency gains.”

“We are confident that these disruptive FinTech technologies will trigger a huge increase in demand for blockchain expertise and we intend to be a leader in exploiting these disruptive new technologies.”

• Ashley Unwin, PwC Executive Board Member and Consulting Leader

As the second of the big four auditors to announce a blockchain initiative, PwC may well be able to carve out a lead against the competition. The company’s research shows that while clients are aware of bitcoin and the underlying technology, they may require some advice in the future.

PwC ran a Consumer Cryptocurrency Survey, in 2015, that showed 83 percent of respondents were unfamiliar with cryptocurrencies such as bitcoin, although 62 percent claimed to have acquired bitcoin in the past 12 months. Almost 80 percent said that they do not expect to use cryptocurrencies for purchases in the next 12 months.

In August, PwC’s Financial Services Institute released a report called ‘Money is no object: Understanding the evolving cryptocurrency market.’ While the results show that cryptocurrency growth over the next year is expected to be “solid but not spectacular,” the report concludes that although most respondents do not fully understand cryptocurrencies, and those that have used them have concerns, they are “bullish about cryptocurrencies’ potential impact on banking and retail.”

The firm is due to release the results of another survey, the PwC Global Fintech survey, which polled 545 leading asset managers, FinTech businesses and key players in banking, fund transfer payment companies and insurance. The results of the new survey indicate that nine percent of asset managers are very familiar with blockchain, and just under three in ten are not at all familiar.

“For more than two years now, various teams at PwC have been monitoring the emerging cryptocurrency market. In response to what we identified as cryptocurrency’s potential to disrupt various markets, we assembled a cross-functional team of PwC professionals from around the globe to analyze cryptocurrency and assess its impact.”

• PwC

The announcement of firm’s blockchain initiative came two days after UK Chief Scientific Adviser Sir Mark Walport released a comprehensive report urging the government to immediately develop a clear vision of how this technology can improve the way government does its business, and is able to deliver services to citizens.

Sir Mark’s report is in line with Davies belief that, “there’s clear evidence that banks, institutions and even governments are looking at blockchain technology as a secure storage and distribution solution.”

Several independent reports from the United Kingdom were bullish about blockchain technology in the last year. A Bank of England quarterly bulletin suggests that blockchains could have “far-reaching implications” in the financial industry.

“What I think is now reasonably clear is that the distributed payment technology embodied in Bitcoin has real potential. On the face of it, it solves a deep problem in monetary economics: how to establish trust – the essence of money – in a distributed network. Bitcoin’s ‘blockchain’ technology appears to offer an imaginative solution to that distributed trust problem.”

• Andrew G Haldane, Chief Economist, Bank of England

PwCs home town, London, has been positioning itself as a Fintech hub for some time, and the UK Technology sector has been steadily growing. According to London & Partners, the sector raised a record US$3.6 billion in venture capital during 2015, which is a ~70 percent increase from the record amount raised in 2014, US$2.1 billion. Their analysis also shows that since 2010, UK technology companies have collectively raised almost US$9.7 billion, US$5.2 billion of which were raised by London-based firms.

“With a flourishing tech scene and one of the world’s leading financial centres, it is no surprise to see that London’s tech companies are attracting record levels of investment. Our world-class talent pool and our culture of innovation and entrepreneurial spirit are helping the sector to grow from strength to strength. We can expect the capital’s tech sector to continue to generate jobs and growth for the city’s economy for many years to come.”

• Boris Johnson MP, Mayor of London