It’s almost a chicken and egg thing: technology and innovation. Few businesses can think of one without the other, and the line between the two is often nonexistent. That’s certainly the way I see the world, as I look at how our firm can use emerging tech to create digital solutions to enduring (and new) problems.
And one of the most promising innovation engines right now? Blockchain. It’s still a relatively new force, but blockchain is already disrupting the enterprise. The global market for blockchain technology is growing rapidly, with forecasts as high as $7.7 billion in 2022, reflecting a compound annual growth rate of nearly 80 percent. And the impact on businesses? Gartner forecasts the business add-on value from blockchain to be around $176 billion by 2025, but growing to more than $3.1 trillion by 2030.
Today, you’ll find blockchain solutions from numerous enterprises emerging in the world of financial services, supply chain management, and even healthcare. PwC has built applications that use blockchain as a form of digital identification and to even manage business contracts.
For example, we helped create a pilot program to leverage blockchain as a vehicle for completing financial transaction settlements. The results of that study showed that implementing the blockchain solution on a broad scale would lead to a 3 percent improvement in U.K. GDP and a more stable business cycle, among other benefits.
Three business barriers
But while early blockchain projects like these show immense promise, challenges around risk and controls prevent blockchain pilots from scaling in the enterprise. That might sounds counterintuitive for a technology that’s touted for its transparency, but it’s a very real threat to innovation.
There are three issues that need to be overcome. First is the lack of an audit trail. Blockchain by its very nature validates individual transactions, but it doesn’t provide a historical ledger that is the basis for traditional auditing and forensics activities. Second has to do with the absence of technology standards. It’s a bit like the early days of the internet, where companies are creating homegrown solutions that use different blockchain architectures and software. Because each enterprise environment is different, there isn’t a standard risk and control framework that everyone follows.
The third is about organizational knowledge and skills around blockchain. It’s a new and sophisticated technology and few internal audit or risk teams understand how it works, much less how it applies to the design and control of their business processes. For example, in PwC’s Risk in Review report, only 13 percent of the 1,500 risk professionals surveyed said that they felt blockchain would have a significant impact on their organization within the next three years. And nearly half—46 percent—admitted they were not confident in their ability to effectively manage the risks inherent in blockchain technology.
So how do you raise the level of confidence and reduce the risks that are inherent in a new way of doing business? How do you make blockchain as accepted as any other technology upon which your business relies? Put simply, build trust through greater transparency.