Content thumbnail Is the Future of Finance New Technology or New People?

13 In the future finance function, CFOs will use blockchains to: farmer from the Chinese vendor, transfers ownership of the • Increase IT security cotton to the Chinese textile mill and automatically pays Blockchains are considered by commentators to be tamper- and files the documentation for customs and duty with the proof, providing unprecedented protection against fraud and Chinese Government. “Smart contracts automate this process hacking. There have been incidents where users have that, today, has a lot of manual steps and paperwork involved.” entrusted their private keys to exchange operators and the However, blockchain is still a new technology that still requires operators have had their security broken, but the blockchain development in areas such as contract dispute management. security itself has not been breached. “What has yet to be fully designed is a mechanism for handling • Manage extended value chains disputes in smart contracts, a topic that I believe will emerge Instead of having to reconcile the internal system of record as an important area of blockchain research in the future” says with information from suppliers and partners, CFOs will be Paul Brody. “Ultimately, I expect to see hybrid contracts that able to pull data from multiple blockchains to create their blend the automation of smart contracts with the provisions system of record. for dispute resolution that exist in traditional agreements.” • Streamline contract enforcement Blockchain technology is likely to play an important role in the A smart contract feature means that the delivery and finance function in coming years. CFOs should be anticipating payment relating to a transaction can be integrated into the how they are going to build the relevant competencies and skill contract itself. With blockchains, the ledger is programmable sets. They also need to start discussing the future of their and contains logic, so you can have a rule that makes a system of record, given that organizations could move from payment on the completion of a service. working with a single, monolithic system of record inside the Paul Brody, EY Americas Technology Strategy Leader, enterprise to working with many different systems. outlines how smart contracts could transform international F]ol][`fgdg_q$Zmlgd\[`Ydd]f_]kj]eYaf trade, saying: Before making large investments and diving into major “Imagine a container ship, carrying cotton from an Australian overhauls, CFOs will of course want to build a clear farmer to a Chinese vendor for processing into clothing, with understanding of which new technologies will be most an Internet-of-Things (IoT) device tracking the ship as it travels beneficial to their finance function, and they will need to be across the ocean. The farmer has a contract with the Chinese highly selective. Importantly, CFOs must also remember that vendor that states that the farmer gets paid based on the the success of any technology greatly depends on the skills of weight of the cotton adjusted for its humidity level when it the people using it. In our research, CFOs cited “staff capacity enters the port of Hong Kong — you could actually write that to adapt to change” as the main barrier to adopting new into the blockchain software code as a smart contract. technologies. Effective change management — including “When the GPS of the container ship enters Hong Kong harbor, transparency about the rationale, and continuous and the digitally connected weighing and humidity sensors communication — will be critical for technology assess the cotton, then those two pieces of data combine and transformations to be a success. trigger the smart contract. That then pays the Australian

Is the Future of Finance New Technology or New People? - Page 15 Is the Future of Finance New Technology or New People? Page 14 Page 16