The U.K. Financial Reporting Council’s Financial Reporting Lab has released a new report on the potential applications of blockchain in the corporate accounting space. According to reports, the group is taking a cautious approach to the technology.
Reports in Out-Law on Friday (June 29) said that the Lab’s analysis, intended as an exploration of blockchain’s role in corporate accounting, does show promise in some scenarios. But the group also acknowledges that blockchain technology is not yet sufficiently developed to actualize its effect in the corporate finance space.
According to reports, the Lab identifies report production, distribution transparency and reporting consumption as three areas that could see the greatest beneficial impact from blockchain. Distributed ledger technology could be used to automate the interconnectivity of accounting records with external transactions, or to consolidate accounting reports. Security and transparency offered by blockchain technology may play a role in compliance, the Lab noted.
Yet analysts warned that this disruption cannot occur until blockchain is standardized to ensure that corporates operate on compatible systems.
While blockchain is a popular target for innovators of the corporate finance space, the number of real-world, working applications remains limited.
Last month, Strategic Treasurer, Bottomline Technologies and Bank of America found in a survey of 275 respondents that only 5 percent plan to use blockchain to accelerate B2B payments. Yet the tool may gain traction in other areas of corporate finance, such as accounting and reporting. Separate analysis from Juniper Research published last year found that more than 80 percent of the nearly 400 professionals surveyed said they have at least a little knowledge and understanding of blockchain. Researchers identified payments and settlement as their top targets for blockchain adoption.
Interoperability and compatibility between blockchain solutions and other platforms in the enterprise is a top concern, while most of Juniper’s survey respondents also cited client and partner adoption of blockchain technology as another barrier.