Wider adoption of distributed ledger technologies (DLT) such as blockchain faces numerous challenges, according to a benchmarking study by EY, the Cambridge Centre for Alternative Finance and Visa.

“DLT as a whole is still lacking maturity and, in many cases, remains undeployed and unadopted,” Cambridge Centre for Alternative Finance co-founder Bryan Zhang says.

“Issues related to scalability, privacy and confidentiality are slowing down technical advancement, while regulatory uncertainties and legal risks are looming large.”

The global landscape for the technology is fluid, highly fragmented, contested and complex, Mr Zhang says.

The financial and insurance sectors are the most heavily targeted for use of DLT, according to the study, which gathered data from more than 200 start-ups, corporations, central banks and public sector institutions.

Other barriers include a reluctance by enterprises to change established business processes, while building networks around an industry, specific use or geography is also proving a difficult task.

Two-thirds of study respondents are members of at least one industry initiative.

“While it is too early to see an industry standard emerge, the rapid growth of open-source ecosystems around consortia presents an opportunity to define infrastructure standards,” the report says.

DLT has the potential to reduce costs, increase speed and efficiency, increase transparency and improve trust.

But EY partner Hamish Thomas says there is a great deal of misunderstanding surrounding the technology.

“More education is needed for businesses throughout the financial services sector, as well as their customers,” he says.

The report notes a recent HSBC global study found 80% of respondents who have heard of blockchain do not understand it.