Blockchain for finance and banking: problems of formation and promises

An acceleration of the Fourth Industrial Revolution is changing all sectors of the economy. Financial sphere is affected by incremental (biometrics, digitalization) and revolutionary (direct branchless banks, an introduction of an artificial intelligence) innovations. Along with the development of traditional institutions, their new forms are emerging: cryptocurrencies, peer-to- peer payments, digital co-investment (crowdfunding) that allows suggesting gradual formation of Finance 4.0 (by analogy with Industry 4.0). The article substantiates that blockchain is a link between the conventional and future finances. Firstly, it simplifies banks’ integration with the new cyberphysical systems and digital assets (a “bridge” to the future). Secondly, it is an optimizing tool for current operations (present day's tasks). And thirdly, blockchain is the foundation for upcoming digital finance itself (parallel reality). Given these factors, the progress of the mutual influence of blockchain and financial system is investigated. Its results show the ambiguous effect of blockchain on the financial market efficiency. On the one hand, it enables an emergence of new tools, reduction of capital prices and transaction costs. But on the other hand, it leads to information distortion, rise of price volatility, market segmentation and escaping the regulatory net. An analysis of blockchain’s implementation by banks in such directions as product optimization, financial engineering, bank-to-bank and bank-to-client communications has shown that the financial sector is not to be ready for the complete blockchain transformation of digital infrastructure. This is due to the lack of experience (risks of unidentified mistakes in code, etc.); blockchain legitimacy issues; banks’ and regulators’ conservative attitude; the gap between public blockchain and corporate one (the latter is a private blockchain, which is often presented as the only possible solution for banks). The scenarios for overcoming abovementioned obstacles were anticipated: from the parallel development of the conventional financial system and FinTech with the use of blockchain at different rates, to their convergence under the influence of economic factors and technical innovations.