Blockchain Opportunities And Risks For Finance

Blockchain is properly one of the most hyped technologies these days as it is finding its way out of the shadows of cryptocurrencies like Bitcoin that was used as a peculiar investment object and payment method amongst hackers and criminals. To some, and that includes the likes of Harvard Business School (HBR) professors Marco Iansiti and Karim Lakhani, Blockchain is a foundational technology i.e. not just a further development of an existing technology. In their 2017 article “The Truth About Blockchain” they compare it with the computer networking technology TCP/IP that laid the foundation for the Internet. Obviously, from the Internet, a ton of new businesses and business models emerged and this is now what people expect from Blockchain as well. As soon as Blockchain enters the space of business then it also enters the space of the finance function. Hence, now it would seem prudent to consider how it will affect Finance and what opportunities and risks it could bring along.

What is Blockchain and why now?

To answer the first question then this is not going to be a very technical article as there are others that are much better at describing what Blockchain is and you can start by reading the article by the HBR professors who have also made a one-hour webinar on the topic that explains the basics. Essentially, it’s an open network which stores data on transactions that cannot be hacked (or at least no one has done it yet). Everyone in the network has access to all the data stored and can verify the transactions. It’s possible to be an anonymous participant in the network though. It’s also a decentralized network meaning that no central party verifies the transactions. To give a popular comparison we can look at currencies. If you take a currency like the € (EURO) then it’s the European Central Bank that guarantees the value of the currency and ensures it can be trusted. Using Blockchain, on the other hand, something like Bitcoin has emerged which is not guaranteed by any central party but by all participants in the network. By storing and encrypting all transactions to occur over time it’s fully transparent what’s happening with this currency and it can be used as a means of payment in many instances.

To answer the second question, it’s simply because Blockchain has now passed the point where it’s only Innovators and Early Adopters that are talking about and using Blockchain. It’s the critical point where more than 15% of companies have started to either use or investigate how they can use Blockchain. That means the chance of it going mainstream has increased significantly. Even my own company Maersk Line has started exploring what opportunities Blockchain can bring for global trade as you can see below.

That means that there’s no way around Blockchain and you need to jump on the train now also if you’re in Finance as you will be exposed to all the transactions that your company will make using Blockchain.

It sounds good in theory but how about hearing from some real people that work with it?

Right, I get you. Enough with the explanations and fancy Youtube videos. You want some real stories about Blockchain, its uses and most importantly how it will affect Finance. That’s exactly what I’m going to bring to you as over the coming weeks and months I will interview people who have real-world experience with it and bring examples of Blockchain in action. Through these, I will also explore various sub-elements of Blockchain like Hyperledger, Smart Contracts, Programmable Transactions, Ethereum etc., and highlight associated opportunities and risks.

Below are the links to the articles in the series where I have made the following interviews

• Jody Cleworth from Marine Transport International who has introduced a Blockchain solution into the shipping industry
• David Stancel an IT auditor and consultant from PWC who's been much involved in Blockchain scene in the Czech Republic and Slovakia.
• Linas Beliunas a FinTech enthusiast who aims to drive the financial world forward with technology
• Kunal Patel a thought leader in the space of FinTech, advisor to the large Indian Bank YES BANK, a mentor for Blockchain start-ups in India and Singapore, and board member of the Blockchain Foundation of India.

They all make some interesting comments for all finance professionals to take note of.

From Shipping To Accounting Blockchain Does It

What Stance Will Finance Take On Blockchain?

I'll Buy Your Coin But What Do I Get For It?

Is Blockchain Ready For Mass Adoption?

If you want to take part in this project either in an interview that will turn into an article or for co-writing opportunities don’t hesitate to reach out to me through a message or posting in the comments section and we’ll get the ball rolling. It will be just like the Finance Master series which also features mostly co-written articles with experts within the various topics. Together we will explore the uses of Blockchain and the impact on the finance function. It’ll be like looking into the future except the future is happening right now! I can’t wait. Can you?

Let me know what you think of the article by liking, commenting or sharing! Blockchain is such an existing topic hence if you have any experience with it I would like to know. Otherwise, follow my Blockchain series here on LinkedIn or on Twitter. You can also dig into some previous series about what's happening in the finance function and not least “Introducing The Finance Transformation Nine Box” which is really the starting point for the transformation. Finally, you should join the Finance Business Partner Forum where we will continue to discuss this topic.

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Anders Liu-Lindberg is the Head of Global Finance Program Management Office at Maersk and has more than 10 years of experience working with Finance at Maersk both in Denmark and abroad. Anders is also the co-founder of the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 5,000 members. My main goal at Maersk is to create a world-class finance function not least when it comes to Business Partnering. I am the co-author of the book “Skab V?rdi Som Finansiel Forretningspartner” and a long-time Finance Blogger with 21.000+ followers.