Why the blockchain belongs on the CXO roadmap – Tech Pro Research
Why the blockchain belongs on the CXO roadmap
The blockchain is not fully mature, but corporate leaders should consider finding a place for it in their technology strategies.
Most CEOs and CIOs agree that implementing more agile and intelligent business processes is central to a company’s profitability and its capability to execute daily work effectively. Accordingly, billions of dollars have been invested into business process reengineering–an effort that has been ongoing in businesses for centuries.
As these businesses transformed themselves, they looked to the technologies of their times to facilitate the switches they desired to make in their operations. This brings us to today’s environment, where the latest technology that could be a real game changer for business processes could be the blockchain–a data structure that makes it possible to create a digital ledger of transactions, with each participant manipulating the ledger in a secure way without the need for a central authority.
SEE: IT leader’s guide to the blockchain
The blockchain is best known for its role as a digital financial ledger that verifies and captures a series of transactions at each transactional “block” to facilitate nontraditional but very secure “value exchanges” for electronic currencies like Bitcoin.
The blockchain, with its capability to verify the “truthfulness” of any block entered into its chain and then assemble the chain of blocks in chronological sequence, can be applied to virtually any business process–not just currency. For example, blockchain technology can identify and use existing documents and records stored in a mortgage company’s numerous systems of record, such as mortgage applications and applicant financial statements.
IBM provides several use cases that demonstrate how early adopters of the blockchain are relying on it to redefine business processes. Here are two examples.
In June 2016, French bank Credit Mutuel finished its very first blockchain project, which focused on improving the business process of verifying a customer’s identity. In a banking environment, verifying customer identity is significant, whether a customer is opening an account, applying for a loan or a credit card, getting documents notarized, or signing up for a safe deposit box. Like most banks, Credit Mutuel had an assortment of business functions and systems that all contained lumps of a customer’s 360-degree identity, but not the total picture. This stymied internal business units because of the siloed nature of departments and systems that coerced bank employees to by hand assemble a total set of documents from different sources to verify a customer’s identity.
By applying blockchain technology, Credit Mutuel was able to assemble records and documents from disparate systems and departments into a single chain of total identity documentation for a customer, available to everyone who was authorized to access the chain. The blockchain application sidestepped what would have been a lengthy IT integration process. It also sped up the identity verification process and improved customer satisfaction.
In Japan, Mizuho Financial Group, a bank holding company, is testing the potential of the blockchain for use in settlements with virtual currency. The objective is to investigate how the blockchain can facilitate the instantaneous exchanges of payments, which could potentially open up fresh financial offerings that the company could make available to its customers.
SEE: Cybersecurity spotlight: The ransomware battle
A major impasse from an enterprise standpoint is that the blockchain is a product of the open source community. There are few controls over a worldwide blockchain development corps that operates with fierce independence and is federating its work into a blockchain code base–albeit in a seemingly random and undisciplined way. In an attempt to bring together all these independent efforts into a coordinated framework, high profile companies like Accenture, BNY Mellon, Cisco, The Depository Trust & Clearing Corporation (DTCC), Fujitsu, Hitachi, IBM, Intel, J.P. Morgan, Crimson Hat, and VMware, among others founded Hyperledger. The HyperLedger project won’t reach its purpose overnight, but major technology companies have a vested interest in its success. All the more reason why corporate CEOs and CIOs should find a place for the blockchain in their technology strategies.
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About Mary Shacklett
Mary E. Shacklett is president of Transworld Data, a technology research and market development rigid. Prior to founding the company, Mary was Senior V.