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Experts: Blockchain Has ‘Massive Potential’ for Treasury

  • By Andrew Deichler
  • Published: 11/21/2016

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LONDON -- While most corporate treasury professionals are at least somewhat curious about the applicability of blockchain technology to their business, right now, many of them are uncertain as to when their organizations might even be close to adopting it. But during a corporate treasury roundtable at the Payments International conference, practitioners suggested that blockchain has the potential to help solve some key treasury pain points.

Regulations

Much like practitioners in the United States, the group of UK and European treasury professionals agreed that corporates have “suffered” from regulations due to banks’ role in the global financial crisis. “When regulators publish and vote for regulations that are ruling banks, they also impact corporate treasurers,” said one practitioner.

Another practitioner noted that since the crisis and the influx of regulations that followed, corporates, banks and associations like AFP and the Association of Corporate Treasurers (ACT) have amassed a wealth of data that they could present to regulators to back up their arguments and hopefully improve the situation. He suggested that perhaps blockchain could be “the white knight riding over the horizon” that could help in this endeavor.

He reiterated what financial expert Chris Skinner had said earlier—that blockchain could be used to create digital identities that could ease the KYC burden. “As a way of building a secure and trusted dataset that everyone can see, blockchain has a huge amount of potential,” he said. “It is a way of potentially unifying information around KYC—particularly for PSD2.”

Trapped cash

Additionally, another treasury executive said blockchain has “massive potential” to improve a lot of areas for treasury, like payment processing, accounting, and a big issue for multinational treasurers—dealing with trapped cash. “Liquidity shortages of hard currencies in certain countries—not regulatory blocks, just sheer economic blocks—prevent you from repatriating cash,” he said. “Blockchain, through cryptocurrency, is a possible way of fixing that.”

He added that the central bank of Nigeria recently did not object to facilitating the repatriation of cash from Nigeria to other countries via bitcoin, because it wasn’t taking a hard currency out of the economy. “So it’s an enabler, and it’s what we do with it that’s going to make the difference,” he said. “Blockchain is not a pipedream; it has real potential. But you have to capitalize on that potential.”

The more you know

The keys to whether blockchain will truly see uptake in the corporate sector trust and education, noted one practitioner. “A long time ago, we trusted out tribes and our family, then we started to trust a central government, or the banks—now we’ve got to trust an algorithm. So let’s think about if we are ready; we need some knowledge and skills there,” he said.

However, he cautioned against simply riding the hype train. “We tend to think, ‘Wow it’s blockchain!’ But what are the customer benefits for us?” he asked.

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