In a recent survey, management consulting firm Bain & Company has found that while theoretically banks are well positioned to confront the changes triggered by the rise of distributed ledgers, the reality is far more complicated.

Over 50 senior bankers, venture capitalists, technologists, international payment association executives and start-up CEOs were interviewed for the survey. Bain & Company found most banks are not prepared to retain control of international payments – a battle for a market worth $150-200 billion today.

“Change will not come easily for banks,” said Glen Williams, who leads Bain’s global payments sector and co-authored the report. “They recognize that distributed ledger technology has the potential to improve the speed, transparency and efficiency with which payments are made, but the current market structure gives them a powerful incentive to stay the course.”

Due to regulatory and other hurdles, digital currency start-ups have been collaborating with incumbent banks. Most financial institutions, however, still remain in ‘experimentation mode,’ wary about the scalability of the technology, privacy issues associated with broadcasting commercially sensitive information about money flows, and the volatility and governance of non-fiat digital currencies.

It went on to say that banks’ initial responses to fast-moving developments in digital currency – appointing mid-level technology executives to industry consortia, participating in the conference circuit and running limited distributed ledger simulations – have left them flat-footed. Ambiguous future course of action is particularly problematic for international payments and trade finance, where distributed ledgers have the greatest near-term potential for disruption.

However, Bain & Company noted that there are companies that are exploring ways to overcome the hurdles. It said that as central banks gain comfort with the technologies in the long-term, the impact zones will shift towards domestic payment systems – including cards and automated clearing houses (i.e. the ‘rails’ over which domestic banks exchange money today).

“Despite hesitancy among many banks, we see evidence that companies are finding ways to overcome technical and adoption hurdles to avoid getting left behind,” said David Gunn, head of Bain’s payments team in Europe, the Middle East and Africa and the report’s co-author. “The wave of investment in digital currency start-ups clearly signals that payments channels are attracting a new degree of interest, and new competitors are changing customer expectations. Innovation is upon us, and doing nothing is not a viable option. Now is the time for banks to move from experimentation to action.”