Smart contracts have the potential to significantly impact the financial services industry by reducing costs and increasing efficiency. A smart contract is a computer program stored on a blockchain that automatically executes transactions when predefined conditions are met. Key benefits include lower administration costs through automation, reduced settlement times, and increased transparency and trust. However, challenges remain around privacy, scalability, regulatory issues, and developing talent with smart contract skills. As the technology matures over the next few years, mainstream adoption by financial firms is expected to begin in 2020.