Lauded as one of the most transformative technologies since the internet, the time for blockchain is now. Learn more about its future implications across industries and the impact on the finance function in EY’s new podcast episode.
The potentially disruptive power of blockchain has been the hottest discussion topic in technology in recent years. Much of the conversation about blockchain continues to be conflated with the cryptocurrency bitcoin or focuses almost exclusively on the impact on the financial services industry. However, blockchain — the distributed ledger technology on which transactions in bitcoin and hundreds of other cryptocurrencies are recorded — has the potential to create tremendous advantages for finance functions in businesses outside of the financial services industry.
For the second installment of EY’s Better Finance podcast, EY’s Global Innovation Leader for Blockchain Technology, Paul Brody, discusses blockchain’s impact on the finance function and the future implications for organizations.
According to Brody, the most advantageous aspects of blockchain technology are the distributed ledger, smart contracts and the consensus algorithm. Taken together, these three aspects of blockchain represent “an incredibly powerful tool against collusion and corruption.”
Because blockchain allows all parties and stakeholders involved in a transaction to have access to the same information in near real time, Brody argues that the technology can solve a number of operational issues experienced by large multinational organizations.
“There are a number of industries that, in particular, are being hamstrung by operational complexity and a large number of parties,” said Brody.
For example, two industries in which blockchain can have a significant impact, according to Brody, are health care and supply chain management.
Blockchain can help the situation by tightly connecting business operations and finance in ways that were never possible before. For example, companies that have global supply chains encounter a number of uncertainties as they move products around the globe. Companies often have a hard time getting to an agreement on simple questions, such as “What is my inventory? What did I purchase? Where is it?”
Using blockchain, a company can track specific parts and products from the start of life, all the way through production, sale and even onto the afterlife of the product, across all the different financial entities, tax rules and jurisdictions.
“Companies can finally come up with a picture of how much money they make over the life of a product,” said Brody.
Another large area of opportunity for blockchain is health care. “There is a lots of complexity in the operations in connecting financiers, insurers, hospitals, doctors and patients,” says Brody.
Brody anticipates that the health care industry will see a large number of use cases around product traceability as hospitals, drug administrators and regulators look to see this technology utilized for the development of new medicines.
For finance professionals across all fields, the possibilities related to increased traceability, profitability analysis and the potential impacts on working capital are incredibly exciting. Companies around the world are starting to take notice. Brody notes that he has already seen a number of companies asking to move quickly toward putting blockchain into production in their organizations.
Without a doubt, Brody contends that “this year will be the year of business and industrial operational blockchains going live.”