The financial services industry is spending about $1.7 billion per year on blockchain, according to a new report by Greenwich Associates.

The report, based on 200 interviews with market participants covering blockchain budgets, team sizes, use case exploration, key challenges and other issues, concludes that banks and other firms are moving beyond the proof-of-concept stage and starting to roll out commercial distributed ledger technology (DLT) products.

The study results show that blockchain budgets increased 67% last year, with one in 10 of the banks and other companies now reporting blockchain budgets in excess of $10 million.

Headcount dedicated to blockchain initiatives doubled in 2017, as banks and other firms launched new proof-of-concept projects or shifted top product implementation. The typical top tier bank now has about 18 full-time employees working on the technology.

In total, 14% of the banks and other companies in the study claim to have successfully deployed a production blockchain solution. Payments and trade finance are the businesses targeted most frequently. Although early tests showed the potential of DLT across a range of important functions like creating revenue opportunities, shortening settlement time, and reducing risk and cost of capital, cost reduction has emerged as the biggest driver of blockchain investment and development for financial services firms.

“More than half the executives we interviewed told us that implementing DLT was harder than they expected,” says Richard Johnson, vice president of Greenwich Associates, Market Structure and Technology, and author of the new report, Blockchain Adoption in Capital Markets – 2018. “Nevertheless, more than three-quarters of projects currently under development are expected to be live within two years.”