Is blockchain on a march to the mainstream?
Narayanan Vaidyanathan, Head of Business Insights
Association of Chartered Certified Accountants (ACCA)
I have been doing an (entirely unscientific, it has to be said!) exercise for about 2 years now at forums where I’m discussing blockchain with professional accountants.
My question to them is: Do you think Blockchain could have an impact on the role of accountants in your industry?
And my 3 answer options are:
No – see it as too different from status quo and unlikely to be adopted in a serious way
Yes – see it mainly as an OPPORTUNITY for accountants to focus on analysis/interpretation and let technology do the ‘boring’ stuff
Yes – see it mainly as a RISK that could restrict the role, impact and sphere of influence of accountants.
2 years ago I’d get a room split of 80-10-10. Nowadays it's more like 20-60-20.
The point being that the tone of the room seems to have shifted from ‘it’s a lot of hype, never gonna happen’, to ‘think this could be big; better keep an eye on it’.
Obviously, none of us can see into the future with certainty, but the fact that a couple of household name banks have recently announced ‘real’ corporate banking/trade finance deals done on a blockchain sends signals that we are well past the stage of theorising. The name of the game now is the development of blockchains that can deliver at scale, in a way that is secure and crucially, fast, in terms of speed of transaction processing.
Given blockchain is an eco-system technology, part of the mainstreaming process involves existing functions in the eco-system adapting to make the most of it. And one such area currently exploring the implications of blockchain is Corporate Reporting.
Association of Chartered Certified Accountants (ACCA) was delighted to partner with the Financial Reporting Council (FRC) in January this year to host a brain-storming discussion to explore just that. One of the things that struck us was the value in the work-shop of assembling top-of-the-line experts from multiple disciplines who don’t often talk together in the same room – looking at blockchain from within academia, audit, banks, entrepreneurs/start-ups, IT companies/developers and regulators.
This initiative was one strand in contributing to the interesting and important report from the FRC, on Blockchain and Corporate Reporting. As the report highlights, blockchain is not the right answer for everything. When analysed against FRC’s reporting framework (production, distribution and consumption), some areas stand out more than others. For me of particular interest was the possible value of blockchain in consolidated reporting for say, a large multi-national organisation with 100+ entities in multiple jurisdictions.
As the report highlights: “Consolidating all reporting entities is a difficult task and removing the effect of inter-group transactions often complicates it even further due to incompatible systems. The common way of solving these issues is through a repetitive process of reporting up to a consolidation team who then match off transactions and make adjustments to reflect the overall group position.”
This is the sort of inefficiency where removing multiple iterative checks and having quicker real-time views that have netted off inter-company positions correctly might add real value. One may be tempted to wonder if this problem is big enough for a company to bother to create a blockchain to deal with it. But the point is that they may not need to.
One of the parallel developments is the large technology companies seeking to create Blockchain-as-a-Service (BaaS) solutions. So if this business need is broad enough, they could create a blockchain backed solution that a company could buy off-the-shelf. In other words, pay a monthly fee for a credible solution from a technology specialist selling that same solution to lots of other companies with the same problem. As opposed to investing upfront CAPEX to develop your own bespoke blockchain solution.
Time will tell of course, but events of the last few years suggest that it would be a brave and possibly foolhardy individual, to dismiss the wave of change that blockchains could bring.
Read the ACCA's report on Blockchain: Divided we fall: Distributed we stand