Digitalisation is the major trend of our era and corporates and financial institutions are running to keep up with the innovations that are rapidly putting new systems and capabilities on the market. Although blockchain technology is still in its infancy, it's a significant part of the digital revolution and will change the face of business across many sectors, including finance. A white paper published by CFO Innovation and EY asks how blockchain could impact the CFO. The report says: “It will arm the CFO with tools and capabilities to allow him or her to become a key business partner in the strategic planning process while running a very efficient and trustworthy operation.”
The white paper suggests five ways in which blockchain could change the CFO's role:
- One of the CFO's priorities is to create a solid, trustworthy financial basis for a company. Blockchain systems can provide enhanced security and reliability and can determine whether financial data is accurate, secure and simple to analyse. The use of smart contracts is an example of how the technology can introduce added reliability, security and efficiency.
- Blockchain technology could improve reporting speed, validity and access so that CFOs could see the movement of every transaction through their system and generate real-time reporting, with increased visibility into payment cycle data and the movement of money down the supply chain.
- Blockchain could tackle some of the siloed structures that still exist in large organisations by enabling a 'network system' with greater company-wide integration. It could also reduce manual manipulation to increase financial efficiency. In intercompany transactions, blockchain technology would create just one version of the ledger, creating the opportunity for intercompany transparency and simultaneous settlement.
- Since the CFO is also responsible for business strategy, blockchain could impact future strategies by enabling new transactions and altering entire business models. In a blockchain environment, finance could be embedded in digital, physical and financial assets, allowing transactions to occur automatically. Transparency and sharing of real-time data is one important aspect of this and blockchain could enable a reliable, real-time view of a firm’s assets and transactions.
- Blockchain's capability of making both public and private transactions more visible, plus the ability to track asset movements, could enable the CFO to provide more transparent data to external stakeholders.
Blockchain is about to take off but there are hurdles ahead
We must resolve issues of security, privacy, law and computer processing capabilities before we see the first wider uses of blockchain in the financial industry
Blockchain can work for cross-border payments: new few hours US-China solution
US blockchain company Wyre are in the process of acquiring Chinese payments platform Remitsy to provide US-China business payments service in which payments take a few hours rather than days
Blockchain momentum gathers as supply chain product due by end of 2017
Technology firm IBM and shipping company Maersk have teamed up to produce a logistics platform based on blockchain for the global freight industry