An Index for Measuring the Extent of Blockchain Technology Adoption in Financial Institutions

There are indices for measuring the different aspects of how companies disseminate information, but none specifically assesses the level of blockchain technology adoption by financial institutions. Given the rapid development and applications of blockchain technology in finance, evaluating its adoption by financial institutions is crucial. In this context, this study develops and tests a formative blockchain technology adoption index to quantify the extent of blockchain adoption in the financial sector, based on data from the annual reports of leading banks in Africa. The research employs a triangulation methodology, which involves identifying indicators that can be combined to form a blockchain technology adoption index. These indicators were evaluated against the SMART criteria for selecting effective metrics. The index was then created based on these indicators and applied using data from 20 leading banks in Africa. These banks were chosen for their regional representation, size, and rankings derived from Africa Business data, a reputable source that uses Tier 1 capital as a key indicator of bank strength. Findings revealed that banks in West Africa lead with the highest adoption score of 72%, followed by South Africa at 66%. Furthermore, an ANOVA test at a 0.05 confidence level was used to examine whether bank size significantly influences blockchain adoption levels. The results showed no statistical difference in the average total assets between larger and smaller banks in the sample, thereby indicating the index’s broad applicability regardless of bank size. This study concludes that the developed blockchain technology adoption index in this study can be applied to banks and other financial sector companies of varying revenue sizes across different regions in Africa and beyond.