In his Hype Cycle for Emerging Technologies 2017, Gartner estimates that it will take between 5 and 10 years before traditional blockchain adoption. However, key players in the financial services industry are already seeing benefits from technology, using blockchain as a "trust protocol" that can change the rules for financial transactions and keep pace with regulatory processes.
In addition, many companies are starting to work with blockchain technology along their supply chain to control supply with their OEM partners. Regulatory agencies are taking advantage of the potential use of the blockchain to better understand the revenue streams and costs of tax-paying companies. This increase in adoption has led accounting and finance executives to consider blockchain a potential technological disruptor in their space, recognizing that there are several key benefits to exploit the technology.
With reliable public records, transparency in the value chain, and the possibility of industry standardization, the implications of blockchain technology are significant. CFOs are now assessing the potential of this innovative technology to increase IT security, eliminate redundancies in cost reconciliation and close books faster. At the same time, they are looking for a process of managing the "at the moment" value chain more connected, from suppliers of suppliers through their company to customers, partners and other stakeholders such as the regulatory agencies mentioned above.
Advanced Security to Repel Computer Threats
In recent months, the world has suffered some of the biggest cyber attacks. This is due to the fact that the rate of Internet and IoT-related device adoption is overcoming the ability to create adequate security. In fact, the official annual report on cybercrime in 2017 predicts that cyberattacks will cost the world 6 trillion dollars per year by 2021, compared to 3 trillion dollars in 2015.
With blockchain, rumors a digital ledger is protected with cryptography. When financial transactions are made, new blocks are added to the chain and each block is assigned a unique "hash" that represents a set of data without revealing the data itself. It is extremely difficult to set a hash in its original text because each block is linked to the previous block. This allows you to verify that certain information, such as a password or document, for example, is the same as when your fingerprint was stored.
Ownership of a transaction can also be incorporated into the technology, verified at each stage, and monitored within the ledger, offering another level of enhanced security. With financial transactions monitored in real time, it is virtually impossible to commit fraud. Instead of seeing only a final version of the ledger, as with today's centralized architectures, all users will see exactly how the transaction log updates have been formulated, making it easier to spot fraudulent activity while it happens.
Eliminate redundancy and increase efficiency
Blockchain increases the operational efficiency of CFOs by improving the speed, access and legitimacy of transactions. Where transactions are traditionally regulated by a central government financial institution, blockchain can remove the need for third parties to secure a transaction. Technology coordinates agreements between all parties with a transparent and shared architecture. Transactions can be posted in seconds or minutes, rather than days, and finance professionals have access to data at every step of the way, allowing them to see and track every liquid capital movement.
Blockchain also facilitates the timely reporting process by recording transactions simultaneously on all copies of the ledger and eliminating redundancies in keeping records. Streaming transfers can reduce some taxes and fees, save companies money and offer finance professionals a bit more time to focus more on forward-looking strategic activities.
Blockchain allows accounting executives to make strategic business decisions through an end-to-end real-time view of transactions across all system registries. By integrating the blockchain into smart technologies, automation tools and existing ERP systems, financial teams can manage transactions under one umbrella, ensuring they are able to keep up with the digital economy. This connectivity offers the opportunity to analyze the forces behind the market trends to keep up with the curve.
The blockchain network can help to move away from the exchange of data to the sharing of governance on the same data. If a transaction is registered, it can be viewed automatically and users do not have to wait until it is transferred to their system – all inclusive of a sophisticated data policy. This allows account managers to access a wide range of advanced analytical capabilities based on mega-transactions, ultimately creating "real big data". In particular in the treasury function, this greatly helps to optimize working capital with insights and forecasts in the value chain of a company. The same goes for accounting and management control: the system allows unprecedented driving possibilities and decision-making processes based on feelings and experience.
With a framework that enables the creation of a reliable and reliable digital record for secure registration of information, blockchain offers accounting professionals opportunities to exploit the full potential of their digital investments. As the role of the CFO continues to evolve digitally, it is crucial to gain in-depth knowledge and understanding of the concept behind the blockchain, so that they are ready to embrace it when the time is right and ensure that they remain competitive with their peers.