13 Apr 2021
A Year After COVID-19 Emerged, Blockchain Investments in Europe Remain Stable, Led by Banking and Manufacturing, with Opportunities in Healthcare and Utilities, According to New IDC Spending Guide
MILAN, April 13, 2021 — European spending on blockchain solutions is forecast to be $2 billion in 2021, with a robust increase over 2020, when the market experienced slower growth due to the pause in investments brought about by COVID-19. According to a new update to the International Data Corporation (IDC) Worldwide Blockchain Spending Guide, blockchain spending in Europe will nearly triple from 2020 to 2024, with a five-year compound annual growth rate (CAGR) of 49.4% for 2019–2024.
"European spending growth in blockchain is robust, considering the issues faced by the global economy in 2020 and the still-adverse situation in 2021, despite the beginnings of a mild recovery. Blockchain technology approaches are changing across companies, which are rebuilding their processes to adapt to faster and unavoidable digital transformation," said Carla La Croce, senior research analyst, European Blockchain Strategies, European Customer Insights and Analysis. "What is happening is that blockchain has started to be seen as an essential component of organizations' digital backbone."
"The pandemic has made many European companies slash their digital budgets and be more focused on short-term ROI," said Radoslav Dragov, senior research analyst, European Blockchain Practice Lead. "Today's successful tech providers typically offer solutions where blockchain is one essential part within a wider technological stack. A successful approach is focused on outcomes and synergy between technologies, not solely on blockchain."
Around a third of European blockchain spending will come from the banking industry, led by use cases such as cross-border payments and settlements, transaction agreements, and trade finance and post-trade/transaction settlements. Banking has traditionally been a leader in blockchain spending, but it has been further boosted by the recent wave of transaction settlement projects, the mainstream adoption of cryptocurrencies, upcoming (generally favorable) regulations at the EU level for cryptoassets, and the growing popularity of and experimentation with Central Bank Digital Currency (CBDC). The banking industry is expected to maintain a strong pace of investment in blockchain, with a five-year CAGR of nearly 51%.
Banking is followed by process manufacturing and discrete manufacturing as the largest industries for blockchain spending, together accounting for nearly a quarter and growing above the European average (with a 2019–2024 CAGR of 50.4% for process manufacturing and 50.0% for discrete manufacturing). The top use cases in these industries are lot lineage/provenance and asset/goods management, both inextricably linked to supply chain management.
This confirms the crucial role played by the supply chain sector in driving blockchain spending, not only in Europe but globally.
"The pandemic has highlighted the need for resilient and transparent supply chains in which real-time information enables better planning and management of resources," said Dragov. "A major factor in the popularity of the lot lineage/provenance use case is new regulation on the provenance of products especially at an EU level."
The five-year CAGR in Europe is driven by healthcare, the fastest-growing industry in Europe, followed by banking, process, and discrete manufacturing, but also wholesale, utilities, and central government. Healthcare has been pushed forward by new projects and solutions in electronic informed consent (econsent) for clinical trials, clinical trial recruitment, and IoT medical device trials, and by blockchain’s effectiveness in anti-counterfeiting measures. Healthcare has been pushed forward by new projects and solutions in electronic informed consent (econsent) for clinical trials, clinical trial recruitment, and IoT medical device trials, and by blockchain's effectiveness in anti-counterfeiting measures.
Healthcare and central government will look to blockchain from an identity management perspective, being the largest use cases for these industries. The COVID pandemic has highlighted the benefits of using blockchain for identity management, with the cryptographical security enabled by blockchain attracting the attention of European governments.
IDC has also identified utilities as an interesting industry for blockchain. For example, in terms of sustainability, blockchain can play a key role in the fight against climate change and environmental degradation. This will also be true for many other industries that can record carbon footprint and prove the sustainability credentials of products.
From a technology perspective, IT services and business services (combined) will account for more than 65% of all blockchain spending in 2021, increasing their share throughout the forecast. A sizeable portion of services still revolve around business and IT consulting because in-depth understanding of the technology and how to implement it is still limited in some European enterprises. IT services in particular will see the fastest growth, with a five-year CAGR of 61.7%. Software spending accounts for 27% of the total, with blockchain platforms being the largest category and the second-fastest growing technology category together with other blockchain software. The increase in spending on blockchain software is driven by the increasing popularity of platform as a service (PaaS), which enables organizations to leverage the advantages of blockchain without having to build extensive in-house capabilities for blockchain deployment. Hardware spending lags behind, with 8% of the total, because most blockchain providers have already seamlessly integrated their solutions into existing IT infrastructure.
IDC's Worldwide Semiannual Blockchain Spending Guide provides guidance on the expected technology opportunity around the blockchain market across nine regions. Segmented by 32 countries, 19 industries, 27 use cases, and 6 technologies, the guide provides IT vendors with insight into this rapidly growing market and guidance on how the market will develop over the coming years.
For more on IDC's Worldwide Semiannual Blockchain Spending Guide, please click here.
For more on IDC's European blockchain research, contact Radoslav Dragov (email@example.com) or Carla La Croce (firstname.lastname@example.org), or click here.
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