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Business Model Transformation from Blockchain 

Kris Seeburn, Technology Evangelist/Professor/Advisory Consultant
| Posted at 9:32 AM by ISACA News | Category: Risk Management | Permalink | Email this Post | Comments (4)

Kris SeeburnOur traditional business model as we known is at a crossroads considering the emergence of the Internet of Things (IoT), artificial intelligence and blockchain. We live in an era of disruption, and we need to redefine our business models.

We need to accept that almost every sector — from banking and utilities to entertainment and agriculture — can expect to experience major business model disruption as blockchain technologies take hold.

Because blockchain technology originated as the core mechanism of the bitcoin digital currency, there is a widespread belief that its potential is greatest in – or even limited to — the financial sector, but a different reality is unfolding.

Blockchain extends to the core of commercial activity, of wealth creation, and goes to the heart of innovation and what makes an economy work. It raises the prospect of changing the fundamental structure of the corporation, of how we orchestrate capability in society, innovate to create goods and services, and engage with the rest of the world. There are far-reaching business models already emerging that are creating ripples on our traditional models, far from the known Internet we use today.

Musicians will be able to reclaim much of the value they cede to record companies by offering their music directly to fans, movie-makers and broadcasters; individual investors will be able to deal directly with companies they hold shares in rather than go through stock markets; and the exclusive use of cars will start to dwindle as such assets are shared over peer-to-peer networks, just to name a few potential applications.

Further, in five to 10 years, the financial services industry will be unrecognizable.

Banks have a simple business model: they move value, they store value, they lend value, they exchange value, they account for value, they attest to value. Every one of those could be disrupted profoundly by this technology.

Blockchain has made the whole financial services industry sit up and pay attention. But it’s not just the threat – there’s a bigger opportunity if you look closely enough.

Japan’s Mizuho Bank together with technology company Fujitsu have conducted an operational trial focused on cross-border securities transaction settlements, which would ensure it is practically impossible for anyone to tamper with transaction histories, as well as shortening the processing time for cross-border securities transactions from the current three days to same-day settlement.

Such distributed disruption moves will have a liberating effect on consumers and small businesses. A customer tapping his or her card in a small retail store would find a blockchain-based settlement would be instant rather than taking several days to occur, as the process simply invokes a change in the blockchain distributed ledger.

One-third of the revenue of accounting companies is derived from audits. But with blockchains, you not only have double-entry accounting — credit and debit — but automatically make a third entry in the blockchain, a time-stamped record of every transaction that has occurred. So rather than an expensive annual audit, it could be instant and real-time. That would in turn free up the resources of forward-thinking accounting companies to invest in more high-end, value-added activities.

As we take stock of the global landscape, we can see every industry, in every major economy, is starting to see big disruptions occur.

The concept of hyper ledger, as we sometimes call blockchain, can provide answers to issues of transparency and so much more. Nevertheless, as with all technology, we need to be wary of how we design the solutions. We will have unequivocal risks, as with the introduction of virtually any technology, but the implementation of blockchain can revolutionize business activities for enterprises across many industries. Designing a blockchain solution with the right controls in place can easily transform many of the models we have come to accept.

Editor’s note: For more ISACA resources regarding blockchain – including a new research report, tech brief and e-learning course – visit www.isaca.org/blockchain.

Comments

Cross Road of Business Models

In my opinion, we do not need to forsake traditional business model but rather evolve to accommodate other business tools and commodities.as economic of things move from Gold to an "Oil Economy", most certainly Blockchain can follow the fundamental foundations and frameworks of the economics.

however, how I wish you could elaborate, on the third element that blockchains introduce to the transaction, is this hypothetic or a fact?

What is the issue that needs to transparent in Blockchains?as it seems this transparency is the excuse that everyone has, for not making the shift.

I personally believe the politics of economic are once again bottlenecking innovation as the block chain.Well as we all don't have a clear idea of what this Blockchain is, it does sound like something worthwhile in the times.
Tshepo090 at 6/19/2017 1:54 AM

 Tshepo090No  6/19/2017 1:54 AM

Hi tshepo

Let me try and ease your difficulty. in the four parts put forward. I am very happy you ask these questions as they make up the fundamentals of the understanding how the technology is really overtaking us slowly but surely.

Ok first part: I would have loved to tell you we could use the basics and build on the new model but unfortunately they are very different in  the way they work. Do not forget blockchain is a shared hyperledger concept and how much and what you can do with the techn is unemerable. It depeneds entirely on what the organisation has in mind. But it can really makes things easy and create more transparency and less fraud by its definition and design. If you are looking at that option. I would advise that you sit down or you are more than invited for us to talk and see pain points are and work on what you want and how we can get there.


Second point: It is not hypothetical it is very factual, it is at this point vitually or practically nearly impossble to play with the original teransaction without going around the shared ledger everywhere to change them. Plus you need to go and identify them one by one. If any fraud exist it will just poop us without doubts.

I invite you to read some other articles i wrote.:
https://www.linkedin.com/pulse/need-changing-skill-sets-evolution-auditors-kris-seeburn

https://www.linkedin.com/pulse/cryptocurrency-challenge-central-banking-system-kris-seeburn

https://www.linkedin.com/pulse/auditing-landscape-change-blockchain-kris-seeburn

These might actually give you a broader perspective.

Third point: We are living in a world where we talk corporate governance, transparency and clean books and ensuring sability and showing that your organiation is clean and worth investing in. Then i fail to understand what do we really want to get away from. Do not foget tat stakeholders wants to see what you are doing and an open book even if family owned at times need transaparency to look for more funds in time of challenges.

Fourth point: You may be astonished to know that the big four have created an alliance to work on blockchain directly. HSBC have moved part of their export / import process documents into block chain so that clients can have their documents instantly and wirthout hampering. And moe and more developments are happening.

We need to adapt to the technology in front of us. Of course a word of warning is the need to proerply undrstand the technology and once you do you end up starting seeing possibilities that is beyond imangination. Something that started for bitcoin technology backend is now an innovation for many things. From phone bills, and many other services which we are yet not even thinking. The biggest issue is that if you banking sector they are trying to fit in but the central banks are very much afraid. Which is how currency and money is going to chane the whole process. Have a look at some of my links.

But again i invite you to have a one on one if you feel you need more understanding.

Thanks again for these interesting questions because you may not be the only one with these kind of questions. So for thoe who read the article and the other bits, let us talk and see as this is a technology framework that would eventually take over pretty fast once people start innovating and opening prospects behind it. Don't forget your smart phone and how much it has changed our lives today.

I hope i may have answered some of your questions and invite longer discussions if you wish to. All the best. And please keep an open mind you may even end up innovating your very own solution.

Kris
Kris Seeburn at 6/20/2017 6:49 AM

Question for the people reading or having doubts about blockchain

I have a question for all.

What are the issues and opportunities that you find or challenges that makes you wonder what is doable or not?

Second this may be out of line but the Internet of Things is also catching up on blockchain and new things are being developed and innovated. So how do you all thik we can stop the evolution or revolution?

Better even are we getting ourselves prepared what is going to just hit us in our face. Have we or are we looking at consideraton such as risk factors, auditing, privacy or security around all these. I research these so i keep open mind and sometimes develop my own approach... how about our colleagues and membership of ISACA and elsewhere. I know for one that many Government audit offices are not even close to the problem we will be sitting on within the next few years.
Kris Seeburn at 6/20/2017 6:55 AM

Question for the people reading or having doubts about blockchain

I have a question for all.

What are the issues and opportunities that you find or challenges that makes you wonder what is doable or not?

Second this may be out of line but the Internet of Things is also catching up on blockchain and new things are being developed and innovated. So how do you all thik we can stop the evolution or revolution?

Better even are we getting ourselves prepared what is going to just hit us in our face. Have we or are we looking at consideraton such as risk factors, auditing, privacy or security around all these. I research these so i keep open mind and sometimes develop my own approach... how about our colleagues and membership of ISACA and elsewhere. I know for one that many Government audit offices are not even close to the problem we will be sitting on within the next few years.
Kris Seeburn at 6/20/2017 6:55 AM
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