A Taxonomy on Blockchain-Based Technology in the Financial Industry: Drivers, Applications, Benefits, and Threats

Blockchain technology, renowned for its decentralization capabilities, has led to numerous innovations across various sectors. One of the most heavily regulated sectors, the financial industry faces a significant challenge as decentralized finance (DeFi) advantages are increasingly recognized and adopted. The decentralized nature of blockchain technology has two primary facets: improved operational efficiency and product innovation. The first facet concerns transparent recordkeeping, establishing trust in business processes, enhancing efficiency, and reducing stakeholder coordination efforts. The second aspect involves the creation of innovative digital financial products that circumvent intermediaries, ensure security, and maintain privacy. However, most practical implementations and academic resources primarily focus on the centralized paradigm within the financial industry. This chapter, therefore, proposes a taxonomy that outlines how the aspects above can be realized. Our research methodology includes a literature review and interviews with domain experts. We delineate four dimensions of the proposed taxonomy: drivers, benefits, applications, and threats. Moreover, we discuss potential solutions to address these emerging threats.