Blockchain has been hailed as a disruptive force capable of revolutionising the banking sector. While this may be the case to some extent, the impact may be overstated when it comes to wider back office operation. A clear example is the processing of cryptocurrencies. Today’s back office systems will, by and large, have little difficulty in accommodating currencies such as Bitcoin. In terms of its use as a currency, cryptocurrencies will operate in much the same way as fiat currencies. One exception is the opportunity for greater sub-division. In the case of Bitcoin, systems will need to accommodate up to eight decimal places, compared to up to three decimal places today.
Upending back office roles—soon
For the financial world, the ramifications are huge since the technology touches on so many aspects of what banks, insurance firms, and financial service operations do. Take, for example, the process of securing a business loan. Lenders could use a blockchain to verify a customer’s identity and financial information, and then approve the loan based on negotiated terms. Once in the system, a future loan could then be approved for the customer with a simple check of the blockchain, assuming the business’s financials remain within the requirements of the loan.
This reduces paperwork, provides added security, and could reduce the time it takes to process the loan. It’s a win-win for the lender and the business seeking the loan. In fact, Daimler AG and a German bank demonstrated this recently by using a blockchain to process a €100 million loan.
While it might take time for other organizations to follow suit, it doesn’t mean back offices can’t expect major impacts in the office—even in the early stages of blockchain implementation. Back-office employees will need extensive training to use blockchain databases, and to access information on the shared blockchain ledgers. Training aside, blockchain could be another new technology that helps employees do their jobs.