Finance professionals should learn to deal with new technologies such as blockchain in order to avoid running the risk of obsolescence, says Cesar Bacani
This article was first published in the May 2018 China edition of Accounting and Business magazine.
If you remember using a 10-key calculator that came with 200ft-long adding-machine tapes, you must be a greying accounting veteran. Those days-into-nights sessions, when bookkeepers keyed tens of thousands of numbers into adding machines and then recorded the results on paper ledgers, ended in the 1980s with the arrival of the VisiCalc (‘visible calculator’) spreadsheet program.
Today, the spreadsheet is, in its turn, sliding into obsolescence, along with the more manual and repetitive aspects of accounting and finance. If you have no idea what blockchain is, or robotic process automation, or a digital assistant, artificial intelligence, self-service analytics and mobile apps, you are, as a finance professional, as endangered as the adding machine was in the last century.
I was reminded of this while reading a recent media release from Northern Trust, an asset management company that launched the first commercial deployment of blockchain technology for private equity last year. Since then, all its private-equity transactions have been recorded as interlocking chains on computer ledgers distributed across many machines in many places.
The ledgers are automatically updated minutes after a transaction is initiated, processed and completed, letting authorised parties know what is going on in real or near-real time. Cryptography and key management help with security. And because many copies exist across geographies, the impact of a cyberattack is mitigated and tampering more easily detected.
According to the media release, Northern Trust has deployed a tool that allows auditors to securely access a ‘golden copy’ – an immutable master record of blockchain data – from their offices. The auditors transfer the information to their internal applications to complete the audit – or, if they have blockchain capabilities, they can conduct the audit on Northern Trust’s blockchain directly.
That’s one specialised use case. But as Singapore-based CFO Eric Cheung writes in CFO Innovation, ‘blockchain applications can underpin the growth of self-driving finance – if these could be connected to the organisation’s internal ledger.’ It’s a process that is already in train in the finance function of his company, enterprise software provider Unit4 Asia Pacific, in the form of digital assistant ‘Unit4 Wanda’.
There are risks. Facebook is currently facing an existential crisis after it emerged that Cambridge Analytica was exploiting billions of bytes of personal data harvested from its platform. Are the enablers of the blockchain also vulnerable? What about the loss of empathy, collegiality and just plain humanity as the robots take over?
Some versions of these questions were probably asked when spreadsheets and computers took over from the adding machines and handwritten ledgers. But just as finance professionals moved on then, so should they evolve as well today. The alternative is to become irrelevant and obsolete.
Cesar Bacani is editor-in-chief of CFO Innovation
"Northern Trust has deployed a tool that allows auditors to securely access a ‘golden copy’ – an immutable master record of blockchain data"