The finance department is facing a step change in regulation. In an effort to make it easier to detect financial crime, transactions must be increasingly transparent. This is leading to time consuming, extensive checks which can cause bottlenecks and delays.
Each new regulation can be costly and complex to implement. Although incoming regulations are necessary to protect the integrity of our financial systems, it is becoming difficult to comply without implementing resource intensive processes. Without the help of technology, the cost of doing business is likely to spiral.
Blockchain is one new system that could have clear benefits for finance departments. Built for cryptocurrency transactions, it is a fully auditable ledger system that is permanent and unforgeable. Each transaction is broadcast to trusted users, and each new entry, change or validation leaves a permanent mark.
The inbuilt transparency of Blockchain eliminates the need for multiple levels of manual checking, freeing up staff time. It automatically broadcasts each transaction to trusted users within the network, and a timestamp is forged when any changes or alterations are made. This could save time and money, according to a report by Accenture which sees financial reporting costs shrinking by 70%.
The time stamping, tamper evidence and visibility built in to Blockchain makes it simple to provide an audit trail. A number of new and incoming regulations require a great deal of record keeping for financial transactions, so Blockchain could also strengthen organizations’ compliance position.
Since Blockchain automatically encrypts sensitive data by design, eliminating the time and cost this would take each organisation using the ledger system to complete.
While there is no way to eliminate fraud and financial crime, Blockchain will make life extremely difficult for would-be fraudsters and increase confidence that transactions being made are viable.
Since transactions are visible to all users on the network and changes are logged and visible, it is virtually impossible to delete a transaction in an attempt to hide it, and virtually impossible to add a fraudulent transaction onto the ledger.
Overall, Blockchain offers built-in transparency, and takes care of many of the manual tasks automatically. Although it remains largely unexploited in the mainstream business world, its applications have huge potential beyond its current remit of use. We look forward to what it could bring finance departments as the technology matures.