The next big thing in financial services won’t make it very far off the ground if FIs don’t innovate with an eye towards compliance.

And blockchain innovation is no exception, Arshi Singh, head of North America product at international payments processor Currencycloud, told Bank Innovation:

Regulatory landscape and compliance concerns are the main barriers to blockchain rollout. Blockchain or underlying distributed ledger technology is positioned as a means to decrease transaction times and lower transaction costs in the world of payments.

A decrease in transaction times seems more likely in the near future; however, when it comes to cost, compliance is one of the biggest drivers.

In other words, FIs are still required to perform their “due diligence,” according to Singh, before rolling out an innovative blockchain product to clients.

Interestingly, compliance, a historically complex and expensive area, has recently drawn interest as an area where blockchain technology could be applied for more transparency and decreased costs.

However, when it comes to payments or cross-border finance, the normal compliance concerns still apply.

We’re seeing blockchain venture into payments, however it hasn’t taken off yet due to [regulatory concerns] and volatility in the value of digital currencies,” Singh said. “It’s not so much about what technology can augment the speed of blockchain adoption, but more about what governance, regulations, and processes can be built around existing technology to make it digestible for mass adoption. Adoption is key in the world of payments. NFC, despite being great technology, hasn’t taken off. Incumbent infrastructure has proven to be really hard to replace.”

In the meantime, FIs shouldn’t forget about the other technologies they have on-hand to upgrade the existing financial infrastructure, such as innovations in APIs and faster payment services, according to Singh.

“These changes can provide the much-needed improvements to existing infrastructure while blockchain continues to mature,” she said. “Having said that, now is the time to experiment with blockchain. Companies that want to be ahead of the curve can benefit from being part of the trial process to figure out the right blockchain solution.”