In an increasingly digitised society, businesses must continuously innovate their platforms. Organisations need to be able to facilitate the evolving needs of their stakeholders in environments where expectations of security, trust and flexibility are rising. Blockchain technology can help facilitate this and prevent security issues such as fraud. Blockchain is still maturing as a technology in today’s marketplace. As a result, whilst business leaders recognise a theoretical use-case for it, practical applications can be hard to pinpoint.
Axway is an information technology company that provide software tools for enterprise software, Enterprise Application Integration, business activity monitoring, business analytics, mobile application development and web API management. Anthony Badger has over 10 years of experience in accounting and finance, with his roles ranging from account executive to sales manager.
Now working as UK FS&I API Lead at Axway, Badger discusses the broad advantages of integrating blockchain into business platforms and explore the reasons why executives should start thinking about what blockchain could do for their organisation:
Enterprises around the globe are redefining their industries utilising blockchain technologies to transform their ecosystems and make transactions easier, faster and safer.
The financial services sector, and fintechs in particular, has been quick to seize on the opportunities afforded by the fact that blockchain makes it possible to process payments almost instantly, and in a manner that protects data integrity. All of which opens the door to making peer-to-peer payments as simple as hitting the send button on a mobile phone.
Blockchain-based payments systems aside, the technology holds out the promise of business process automation that is set to revolutionise how enterprises everywhere conduct their business operations. Everything from supply chain management, billing, transaction processing and inventory management to operational and auditing tasks.
Let’s explore why enterprises are looking to use blockchain to unlock operational efficiency and connect to new value chains being created in the digital economy.
Blockchain – a digitalised and decentralised book of record
A blockchain is essentially a distributed digital ledger of transactions that makes it easy to securely transmit, store and manage data on any process or transaction between multiple parties. Powerful features like immutability, encryption and transparency make blockchain’s distributed ledger technology ideal for a variety of data-rich business processes.
Around the globe, firms have been exploring blockchain solutions that streamline interactions with multiple parties. The inherent privacy, interoperability, security and identity and tracking capabilities of the technology has already seen the manufacturing and logistics industry in particular embark on blockchain projects designed to transform their supply chains.
Providing a totally transparent way of conducting peer-to-peer transactions, tracking assets, and building trust, blockchain is a next-generation business improvement and collaborative technology that promises to be a game-changer when it comes to data sharing, identity management, asset tracking, payment and compliance.
In recent years, blockchain has been steadily moving from hype to real-world implementation as enterprises race to leverage the distributed ledger technology’s business value. In addition to streamlining and automating processes across internal and external systems, organisations are also utilising blockchain to initiate innovative new digital business models and joint ventures.
Real-world applications for the finance sector
There are multiple ways in which blockchain has the potential to transform how financial institutions operate and make a real impact when it comes to improving data management and reducing costs.
For example, blockchain technology could provide a single source of ID information that would support the seamless exchange of documents between banks and external agencies that would automate customer identification and Know Your Customer (KYC) compliance processes.
Since many banks need to establish a single customer view across different jurisdictions and business lines, the ability to allow permitted parties to share data securely in real time would address the twin challenges of managing both KYC and anti-money laundering checks. Similarly, enabling permissioned access to the consumer data needed for KYC will also enable a more frictionless customer service while preserving the resources needed to support onboarding services.
Blockchain can also simplify and streamline asset management trade processes, enabling brokers, dealers, custodians, clearing and settlement teams to achieve more effective data management and processing cycles with minimal reconciliation. Automating exchanges, settlement and clearing would improve performance, eliminate delays, and increase transparency.
Efficiency can be further boosted with smart contracts that go beyond the transaction to provide tamperproof records that cannot be amended. For example, creating policies as smart contracts on a blockchain would eliminate manual processes and the complexities of handling fragmented data sources to provide complete control, transparency and traceability for each claim that could lead to automatic pay outs and a reduction in fraudulent claims.
Smart contracts automate workflows, triggering predetermined actions when certain conditions are met. Providing standardised rules and simplified trading options, blockchain reduces the costs and complexities of transacting and makes transactions safer and more secure. Banks in particular are excited at the prospect of applying the technology to arenas like syndicated loans, facilitating cross-border payments and funds transfers, as well as improving data governance.
Powered by APIs
Application programming interfaces (API) play a key role in enabling the real-time data exchanges and synchronisation that provides an auditable record of information that underpin blockchains. They are also key for allowing secure interoperability between all partners that participate within the distributed ecosystem.
By making use of an API-driven digital transformation strategy, the possibilities are limitless. Today’s senior executives are now beginning to pilot the integration of blockchain technology into business platforms to build trust and resilience across financial systems, manage risk more efficiently, and enable faster, more compliant operations.
Bringing everything together, APIs are enabling finance institutions to achieve seamless interactions between legacy platforms and reduce data redundancies across applications, simplify interactions between customers and partners, and find new ways to distribute new products via digital channels.
One thing is for sure, distributed ledger technology is the next phase of the digital transformation journey that is at last starting to deliver on its promises. Whether it’s overcoming the challenges of legacy infrastructure or forging new ways to provide the financial services customers want, organisations are looking to blockchain to reinvent their value chains, unlock innovation and drive new growth.