In the same way that digital downloads has crippled the mass market of vinyl and CD’s does Blockchain means the end of financial services and banking straight through processing and the accountancy service model?
By reviewing the cost reduction culture of recent years it is understandable why the banking industry has become ripe for Lean Straight Through Processing (STP) and Business Process Outsourcing (BPO) Accountancy. But like other change and transformation activities embedding irrelevant processes in technologies, STP and then BPO accountancy is missing the essential point, they are no longer required if Blockchain is deployed.
instead of building Blockchain in the image of Banks, Banks should be rebuilt in the image of Blockchain, dramatically reducing process complexity and overheads
A Blockchain model for STP and BPO Accountancy
There are several factors about Blockchain that make it eminently more suitable for the highly regulated environment of STP and Accounting than software and middle and back office staff (regardless of how their provision is acquired). And of course you can dramatically reduce your expensive accounting staff costs as reconciliations, account status etc is automated as part of the chain, even regulatory reporting can be automated and regulators can have direct access to the blockchain through a rights and roles model only seeing at the right level what the banks and financial institutions want them to see.
Blockchain is distributed
A Blockchain (assets or liquidity) can be distributed to other Banks, Clients, Original Owners, Regulators, Tax Offices at an organisational level it can also be distributed to divisions and functions within organisations.
The nature of Smart Contracts can be defined for each organisation through the use of a Content Object Model around any given Item, with information facets in much the same way as WCMS systems are setup. Transaction data is transparent based on a Roles and Rights Model within an organisation and externally, once set up for each User Type reporting is automatic and no collation (from other sources or currency factors as these are embedded) or interpretation is required, this totally removes the accountancy functions.
Blockchain is not editable
Because blockchain is not editable
an editable blockchain would be called a Database and is essentially not a blockchain
all charges and transaction errors must be added to the chain and will be visible according to the chains Rights and Roles Model. Therefore nothing is lost and the chain will be compliant to regulation through its architecture rather than by addition of more processes.
Blockchain is smart (blockchain future-proofs itself)
Because Blockchain enables complex content object models, Smart Contracts allow the addition of new information. Unlike a database that would require a rewrite for additional information
when a Smart Contract has additional information added it updates the current block and evolves the chain
Blockchain will have a global impact
For years technology has impacted low skilled worker often removing humans altogether, the use of artificial intelligence supports the removal of strategy and management, the IoT removal of logistics and retail while Blockchain will initially impact banking and insurance but it also holds the potential to manage all information in a traceable and secure way.
Any country reliant on the financial services sector for jobs and taxation will need to look for an alternative source of income given the dramatic decrease in staff required to run a bank, trading or insurance company in the near future.