From PayPal to Venmo, Google Wallet, Amazon Payments and more, there are a myriad of ways money is processed during transactions around the world. One of the most trusted and reliable ways may be through bank account transfers. As such, there’s a need to simplify all of these complex finance routes, and blockchain technology seems to be the anchor for this.
By 2020, over 80 percent of bankers expect to see commercial adoption of blockchain, according to a recent study conducted by Infosys Finacle. This research, which surveyed 100 financial services professionals, also found that 51 percent of CTOs and CIOs will be utilizing blockchain technology to drive initiatives.
Given this amount of attention in the financial arena and C-suite, it’s hard to ignore the impact blockchain technology is having on global transaction interactions. We recently spoke with Ernst & Young (EY) Global Innovation, Blockchain Leader Paul Brody to gain some deeper insight into this issue.
PYMNTS: On a global scale, how does blockchain technology impact transactions?
PB: Technology revolutions on this scale take a long time to build out. I would expect the long-term impact of blockchains to be similar to that of the cloud. That being said, we’re 15 years into the cloud era, and while companies are not building new on-premises applications in the old ways, most corporate computing is still done in classic data centers. Big transformations of this scale can take quite a while.
PYMNTS: How has blockchain technology impacted enterprises at their core?
PB: Blockchains are a reinvention of the most foundational information technology out there: transaction processing. Blockchains are simple mechanisms for managing transactions but with a very special twist: They’re designed to reconcile information across many participants, even if there is no centralized controller. This ability to coordinate transactional data across networks of many partners is exceptionally valuable because it mimics exactly how modern enterprises have evolved in recent years.
Over the last two decades, wave after wave of transformation has turned companies that were once highly integrated businesses into networks of specialized firms. Where leading companies once designed, made and distributed their own products, it’s more common today that they may only design or market products and manage a huge network, one where it’s sometimes hard to find the center.
Almost everything that gets done in modern enterprises relies on transactional data: orders, appointments, payments and inventory levels. While business models have evolved, information technology has not kept pace. What was once a single IT system with consistent information has become a mass of conflicting, out-of-sync information flows.
PYMNTS: What opportunity does blockchain technology provide for the financial industry?
PB: Blockchains give us the opportunity to put all that information back on the same page. The same logic that makes it impossible for someone to spend the same bitcoin twice can be harnessed to make sure that a piece of inventory cannot be in two locations at once or a customer to have two conflicting bills to address.
It’s hard to overstate the power and value of getting many partners on the same page for every piece of critical business information. Every single partnership, every single business operation today is, at scale, a question of systems integration. Strategy depends on IT, and before analytics or process transformation or machine learning can add value, everything depends on getting the transactional data right.
PYMNTS: Is there potential for blockchain technology to touch any other industries outside of the financial realm?
PB: I am hard-pressed to think of a single industry that won’t have a use for blockchains. Any industry that depends on multi-enterprise collaboration will find blockchains as a trustworthy mechanism for enabling that process.
PYMNTS: Are there any blockchain technology studies being done at EY?
PB: We have established sub-teams at EY around banking, financial services, supply chain management, government services, power and utilities, health care, life sciences, legal services and cybersecurity. We’re busy putting together our points of view in each area. So far, we’ve published an overview, as well as deep dives in health care, legal and tax.
PYMNTS: Out of the EY case studies mentioned, which one best describes blockchain technology in action?
PB: I personally like the case example that we are working on with supply chain management. The ability to share critical information across many players is enormously valuable, such as inventory levels and shipments. Combine that with payments, and you have the ability to revolutionize not only company finances like working capital but also supply chain performance, using more accurate numbers to power more accurate service levels and higher performance with less inventory.
Can we draw similarities between cloud growth and that of blockchain technology’s upward trajectory as Brody mentioned above? While Brody shared that it’s taken nearly 15 years for applications to make the move from on-premise to data centers, it’s possible we’ll see the same slow-burn growth with blockchain technology.