Blockchain: Opportunities and challenges

So what’s really in it for treasury? Imagine a world, where you are able to monitor and record assets in real-time; gain transparency of who owns them, settlement information and transaction details; this would be a huge efficiency gain and would allow treasury departments to operate in a more streamlined way. The result: increased visibility, a reduction of manual tasks, fraud avoidance and better risk oversight through the de-risking of certain transaction types. All in all, Blockchain promises to be a big transformation for financial services, one bearing opportunities as well as challenges. Blockchain technology will allow for new and innovative products and solutions as it can be applied to various financial products and services. Take ‘We.Trade’ for example. This is a Blockchain-based solution which aims to create a digital marketplace where small enterprises can trade with each other directly. This innovative process will significantly benefit trade finance and financial supply chain management; providing new opportunities for financial service providers and clients alike. Blockchain should really be thought of as an evolution rather than an overnight revolution. Before Blockchain can be broadly applied there are two key points that need to be solved: A) creating and recording digital identities, B) representing fiat currencies such as $, £,and € on a distributed ledger. To solve the latter there are initiatives such as the Utility Settlement Coin project which aims to combine the advantages of central bank backed currencies with the advantages of Blockchain technology. Even before considering all the legal, regulatory, interoperability and data privacy challenges still to be solved, it is very likely that a lot of payments will be made using traditional methods before we see a broad appetite for Blockchain-based systems.

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