Chief Financial Officer

IBM Executive Discusses Blockchain's Impact on Finance

Rich de Moll, Vice President, Blockchain Solutions & Transformation, IBM, Cognitive Process Services, discussed blockchain and its impact on today’s organizations in his presentation to Argyle’s CFO membership at the 2017 Chief Financial Officer Leadership Forum in Atlanta on May 18. In his presentation, “Blockchain: The Next Disrupter for Finance,” de Moll described how blockchain can transform the role of the CFO.

According to de Moll, today’s finance professionals allocate significant time and resources to reconciliation tasks. These professionals often lack visibility, trust and efficiency into finance processes, which leads customer and supplier finance teams to address queries and resolve issues that impact working capital and operational costs.

However, blockchain helps finance professionals in a number of areas, including:

  • Time: Many business transactions are time-sensitive and prone to process delays, de Moll noted. Thanks to blockchain, finance professionals can streamline everyday business transactions and eliminate inefficient processes.
  • Risk: Many business transactions are unverifiable and prone to errors and tampering, de Moll indicated. Conversely, blockchain empowers finance professionals to identify and limit risk, reducing the likelihood of costly, time-intensive security issues.
  • Cost: Many business transactions are expensive to complete and require extensive documentation. Now, blockchain helps finance professionals eliminate overheads and multiple intermediaries, leading to lower operating costs.

With blockchain, finance professionals can reap the benefits of advanced data automation and security, de Moll pointed out.

“Each data element in a transaction is encrypted in a block. Those blocks are strung together across shared ledgers,” de Moll stated. “You can add a transaction that is immediately available to everybody, but you can’t go back and undo something. That’s part of the security that makes blockchain immutable.”

Moreover, blockchain involves the use of “smart contracts” with embedded business terms, which ensures that transactions are executed as agreed by the parties. This helps finance professionals accelerate myriad tasks – something that is exceedingly important to finance professionals at organizations of all sizes.

“The smart contracts are the rules, and these contracts enable a greater percentage of transactions to go through and not require manual intervention,” de Moll said.

Ultimately, blockchain is a business enabler, de Moll said, and can help finance professionals become key contributors within their respective organizations.

“There is a lot of friction in today’s financial processes, and blockchain helps address many of those inefficiencies,” de Moll indicated.

Blockchain can even help finance professionals overcome outdated processes that otherwise may prevent organizations from accomplishing their immediate and long-term goals.

“Having old-fashioned, legacy processes can be a hindrance to your go-to-market activity,” de Moll pointed out. “We’ve got to think about doing accounts payable differently.”

With blockchain for invoice processing, companies could reduce their cost per invoice by 60 percent to 80 percent, de Moll pointed out.

“Having old-fashioned, legacy processes can be a hindrance to your go-to-market activity. We’ve got to think about doing accounts payable differently.”

Blockchain delivers unparalleled transparency for buyers and suppliers, ensuring both parties can use a common platform to reduce the risk of fraud, disputes and operational costs.

“We think this will establish a new performance best-in-class on processing invoices for clients. And for the supplier and the buyer, blockchain provides transparency,” de Moll said.

Blockchain also helps reduce the risk of human error, according to de Moll. It empowers finance professionals to create consistent, automated processes, driving improved efficiency.

“You get better controls because you take the human element out of processes,” de Moll stated. “We’re all inconsistent on how we do things, but blockchain provides automation.”

With blockchain, finance professionals may be better equipped than ever before to maximize the value of data.

“When you get the rich data by running things through blockchain, you can apply artificial intelligence to perform predictive cash flow forecasting and workflow capital optimization. That will be the next generation of benefits from blockchain,” de Moll indicated.

Finance professionals should consider blockchain to accelerate and improve many everyday processes, de Moll said. Blockchain often is easy to adopt and can help finance professionals optimize the value of their technology investments.

“We’re all inconsistent on how we do things, in how we do things, but blockchain provides a platform and a standard way for multiple parties to execute transactions with trust.”

In addition, de Moll urged blockchain education for finance professionals. By developing effective blockchain training programs, organizations can teach finance professionals how to fully leverage blockchain and get the most out of the technology.

Organizations should assign ownership to blockchain programs and establish priorities relative to these programs as well, de Moll said. This will enable finance professionals to understand why blockchain is being used and its value within an organization.

For CFOs who want to digitally reinvent finance, blockchain is a must-have, de Moll stated. Blockchain can help CFOs accelerate the pace of innovation, de Moll said, as well as transform cost structures and build long-lasting analytics and cognitive capabilities that extend across an organization.

Visit Argyle Executive Forum's 2019 Finance Leadership Forum: the Evolving Role of the CFO in Dallas, TX on Oct 16, 2019

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