The will-we-won’t-we discussion that has dominated blockchain and its possible use in the enterprise over the past year has largely revolved around technology and whether it is practical to bring it into the enterprise. But there are other considerations.

At its recent IT Symposium/Xpo, Gartner identified another obstacle that is going to delay its use in the financial sector by at least three years. The problem according to Fabio Chesini, senior research director at Gartner, is that a lack of interoperability standards will prevent pervasive blockchain deployment across financial services ecosystems.

He pointed out that standards are critical for financial services entities because they are constantly moving assets between clients, partners and other institutions. At the moment, bank CIOs can choose from numerous blockchains, available from either enterprise-grade approaches such as Corda, Hyperledger and Digital Asset, or the many public blockchain standards like Bitcoin, Ethereum, Cardano, EOS and Tezos. “It is unlikely there will be a single de facto standard like in the Open Systems Interconnection (OSI) model, at all levels. Given how "new and fragmented the state of blockchain standards is, we expect no more than four standards to lead the market in the next three to five years," Chesini said in a statement.

There are a number of reasons why this is the case, according to Michael Yuan, founder of a new decentralized marketplace, OpenBay, and CEO of Second State.

First, he said, incorporating blockchain technology into businesses and industries is a significant investment, requiring substantial time, money and effort. In addition to the still significant amount of institutional resistance, there are operational and technical challenges that have inhibited mainstream adoption of blockchain technology. There are ways, though, to overcoming this.

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1. Standardized Middleware

For developers to create usable distributed applications, there needs to be a viable blockchain protocol to support “smart business contracts.” Such a protocol must include not only a virtual machine, but also a middleware software stack outside of the blockchain. (Today this is handled by so-called "DApps" in a non-standard way.) While running the blockchain ledger, every node in the blockchain can support standardized middleware.

2. Reusable Software

As with successful enterprise software, the key is not to create an all-powerful virtual machine or programming language, but to build an extensive library of reusable software components — and then standardize the whole stack. Take the Linux operating system, for example. It was widely adopted by enterprise users only after the community had extended the core operating system with thousands of business-friendly software packages (and after Fedora/Red Hat came along to standardize the stack). The strengths of enterprise platforms lie in their standardized libraries and frameworks.

3. Connecting Blockchains

Cosmos, the much-anticipated network that was designed to improve blockchain interoperability, released its live software earlier this year. Is that the breakthrough? It’s too soon to say, but crucial in a high-performance environment, where computing power and network latency are typically not a concern, is the design for reliability and interoperability in enterprise applications. It’s why blockchain is already moving from just another IT function to a true ecosystem builder — not if, but when.

Related Article: Blockchain Is on the Way, But Adoption Is Slow

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Beyond Interoperability

Add into the mix the fact that over the last 10 years more than 5,000 blockchains have emerged, even if many of them have disappeared already. Sean Weisbrot of SideKick, a developer of a messaging, payments and marketplace ecosystem, pointed out that some of these blockchains are for decentralized, autonomous communities, while others are for enterprises to use internally. The problem with enterprise adoption, as a result, goes beyond interoperatiblity. “The problem facing the inclusion of blockchains into the financial services industry is not a lack of standards, but rather that each organization has specific needs, and there are many flavors of blockchain,” he said.

Another problem is the number of engineers capable of developing such delicate and complex systems are few and far between. Once an organization is capable of finding a team of people who can help develop a solution, then they must look at how they want to use it.

Then, they must determine if it's possible to integrate it with their current legacy systems or start building an entirely new system from the ground up in order to utilize the benefits of the blockchain they wish to develop. Each of these steps can take several years alone. Since every organization is different, it's impossible to establish a standard in the industry. “What we will most likely see in the future is technology which enables different blockchains to interact with each other, rather than forcing everyone to use the same or only a few blockchains as standards,” he added.

So why is blockchain so prized by financial institutions. According to Matthew Hine, CEO of He3Labs, who said in a blog post published earlier this year, there are three other things that need to happen for adoption in the financial sector.

1. DLT Technology

Blockchain technology (DLT) must improve. If we compare the ambition of blockchain to its current iterations, it’s clear that we are far from a point of maturity — far even from a point of “good enough” for many applications. Transaction rates on decentralized public networks are low.

2. Completing Tech Stacks

Software stacks need to be complete. The ecosystem is just starting to awaken to the fact that businesses will not build directly on blockchain and smart contracts. As with every previous breakthrough technology, there must be mature layers of middleware to make a complex technology accessible to businesses, governments and other organizations.

3. Better Ecosystems

Businesses need to begin truly building and delivering using DLT and software stacks together to build better ecosystems. And this, Fabio Chesini of Gartner added, is what organizations need to take on board, “Bank CIOs must be mindful of this nascent and fragmented state of blockchain standards. It is unlikely there will be a single de facto standard like in the Open Systems Interconnection (OSI) model, at all levels. Given how new and fragmented the state of blockchain standards is, we expect no more than four standards to lead the market in the next three to five years.”