Fintech 2019: What is Blockchain?
Over the past years, the neck-breaking emergence of digitalization over the Finance and Accounting (F&A) industry introduced us the Blockchain technology. As a Chief Financial Officer (CFO), you may find yourself familiar with the term, but do you fully grasp its essence for your company’s growth?
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What is Blockchain?
Though more recognized for underpinning Bitcoin’s creation, Blockchain offers a wider scope of features for your accountants and auditors.
Each ‘block’ is designed with a cryptographic signature linked to each other for a more precise transaction recording. With blockchain, you can enter numbers into a system without any central domain, which is made possible because of its distributive ledger structure. Any changes made in the database is synchronized across all copies of the ledger in real-time.
Needless to say, blockchain is designed for a more transparent shared portfolio among CFOs, stakeholders and business owners.
Blockchain & CFOs
Cash Flow Improvement
As commercialization comes through, the roles of CFOs also escalated into a higher gear. According to Deloitte, out of 3,745 people (40% being executives), 37.2% indicated that blockchain is a vital part of their company’s success. Since CFOs need to establish a steady or increasing trajectory of their cash flow, the rise of blockchain is a great help in creating sound financial decisions that keep their business up and running.
Blockchain in business finance helps CFOs deploy strategic plans across the organization and keep it at par with the company's goals. As per EY, 26% of US respondents agree that cutting costs through automation is top-priority for CFOs, which is now possible through the incorporation of blockchain technology in your team’s everyday operations.
One of blockchain’s unique selling points is its decentralized system.
Having a distributive ledger means all copies of the database are simultaneously synchronized and updated. Through a shared portfolio, all users with access to the ledger can verify all the data being entered into the system, thus ensuring breach and tampering of information impossible.
With a solid ground of analytics, you can generate a verified and a more accurate financial reports, painting a clearer picture of future circumstances. Your insights can greatly help you in making real time decisions and forming strategic steps in the event your operations or finances go downhill.
Secure & Efficient Audit Operations
As a decentralized ledger, blockchain technology raises the bar for a safer platform to handle your finances. Once a data enters the system, verification from the network is essential to add the block in the chain where it is chronologically recorded and cryptographically signed. If one block is hacked, it doesn’t automatically affect the rest of the blocks, making it hard to tamper the data.
Blockchain and cryptocurrency continuously develop the ways you operate and manage your business, like in your audit preparations. With blockchain, auditors can put an end to random samplings since transactions in the distributed ledger are all verified and accurate.
With a more profound understanding of what is blockchain, this can pave the way for a more streamlined process for your team. This rising technology may still be in its infancy but its impact on the entire F&A system is as huge as you can picture. As blockchain transforms the industry, this leaves you the question of when it will reach you and how you will handle its implications to your growing success.