In an online post, Deutsche Bank has said that while some commercially-viable blockchain implementations could be seen by the end of 2017 and into 2018, for mainstream adoption there are still challenges to overcome.

The bank said that the adoption of blockchain will vary according to geographies, regulatory frameworks and the complexity of assets and their implementation, including the cost implications when new and existing technology co-exist for a period of time. Pointing out the roadmap for blockchain adoption, the bank emphasized that it will be a step-by-step process, rather than an overnight revolution.

“We will still see in the short-term some small commercial viable examples, the more complex markets will be around 3-5 year mark, and ultimate pervasive adoption is more in the 5-10 year bracket. That 10 year is a nice alignment to the World Economic Forum’s estimate that 10% of GDP will be stored in blockchains by then”, Chief Digital Officer Edward Budd said in a statement.

The post noted the challenges that should be overcome for mainstream blockchain adoption. It said that the market needs to focus on areas such as product quality assurance, security, legal requirements and governance before applying distributed ledger technology to regulated financial markets, particularly transaction banking.

In this whole transformation, collaboration between market participants,competitors as they are today, will be key in order to solve the challenges aroundthe legal, regulatory and data aspects that need to work together”, Budd said.

The bank believes in the potential of blockchain technology to transform the business model of many segments of the financial services industry and other industries. Also, it could considerably change the role of service providers by requiring them to review how products are delivered today.

“Deutsche Bank is running a portfolio of activities for blockchain / distributed ledger technology across the Bank. Some of these innovative activities are driven internally and facilitated by the Deutsche Bank Innovation Labs. In other areas where we cannot - or would not - look to test on our own we collaborate with industry partners such as the market consortium DLG R3”, it said.

In an email to Cointelegraph, Deutsche Bank also commented on the recent DAO hack, saying that the incident has highlighted the importance of proper governance standards. It said:

“To those of us focused on getting this out of the lab and into production use in markets, it has served as a good and timely reminder on the importance of clear governance/standards and production assurance. These are mandatory elements for a regulated entity to consider when putting any technology into production either individually or as part of a market scheme. They will be the core pillars of the schemes needed to run the private/permissioned blockchains logical for transaction banking product lines.”