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PwC Forecasts Smart Contracts as Future Replacement for Traditional Contracts

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Stu Clelland

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Stu Clelland

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Last updated:

June 28, 2023

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The use of smart contracts in the financial industry is increasing, and they are expected to become the standard in the long term, according to a study by PwC.

The study found that 52% of IT decision-makers in the financial sector plan to introduce smart contracts in the near future.

Over a third of respondents expect smart contracts to replace traditional financial transactions.

Smart contracts offer advantages such as accelerated and more effective business processes, cost savings through automated execution and monitoring, and the ability to adjust rates or clauses promptly with the help of AI.

IT decision-makers surveyed expressed confidence in the reliability (95%) and advantages of cyber security and transparency (95%) offered by smart contracts.

They also highlighted their potential for increasing sales (84%), saving money (53%), and achieving sustainability goals (74%).

Smart contracts are currently used most frequently in the financial sector for digitizing transaction networks, new digital business models, and peer-to-peer payments.

Many respondents also plan to combine smart contracts with AI and utilize them in sustainable or decentralized finance.

Legal Hurdles Hampering Adoption

However, the adoption of smart contracts faces challenges. Only 19% of service providers surveyed currently use smart contracts, mainly due to a lack of experts to implement the complex applications and integrate them into business processes.

Concerns about legal security and data protection also hinder adoption.

Nevertheless, technological solutions such as zero-knowledge proofs integrated into blockchain platforms can ensure compliance with data protection regulations.