Blockchain appears to be on track to revolutionize traditional enterprise finance in the years to come by raising the bar for efficiency, trust, and data integrity. In the section below, we look at some of the enterprise market’s early movers as well as the promise of blockchain for finance, including a fully end-to-end digital letter of credit.
Decentralization and peer-to-peer exchanges, made possible by blockchain and distributed ledger technology, are increasing the efficiency of financial transactions around the world today. These technologies have successfully enabled fast payment options across the globe and have shown to be quite effective in streamlining conventional transaction processes.
Although blockchain evolved with smart contracts several years ago, opening the door for blockchain to be deployed across a wider variety of industries, banks and financial sectors still represent by far the highest share of blockchain deployments today, mainly for clearing settlements, and cross-border payments, and digital identity management. According to a report by Jupiter Research, blockchain deployments will enable banks to realize savings on cross-border settlement transactions of up to USD 27 billion by the end of 2030 – reducing costs by more than 11 percent.
The benefit of Enterprise Blockchain for finance
Dedicated blockchain enterprise platforms have the potential to change how businesses operate globally, with the ability to create bridges based on transparency, security, and trust with other companies, industries, and economies across the globe.
Here are some of the benefits that blockchain can bring to today’s businesses and their value chains:
Trust and transparency with respect to privacy: The shared and immutable source of truth enables all parties in a business network to collaborate, reach agreements and manage selective data while maintaining integrity and confidentiality.
Security: There is no single point of failure due to its distributed architecture, reducing the need for data intermediaries. It is tamper-proof against fraud and malicious third parties, making it practically impossible to manipulate or hack.
Security: There is no single point of failure due to its distributed architecture, reducing the need for data intermediaries. It is tamper-proof against fraud and malicious third parties, making it practically impossible to manipulate or hack.
Business logic programmability through smart contracts: Blockchain technology supports business logic implementation and automation through programming code, validating each step of the business process with accuracy, security, and step-by-step control.
High performance: The modern private blockchain platforms are engineered to sustain hundreds of transactions per second as well as periodic surges in network activity.
Many businesses have explored the advantages of blockchain for years. However, even though the technological underpinnings have untapped transformational potential, most businesses are still in the testing phase and have not yet rolled out any production-ready solutions.
Ericsson is among the first enterprises to forge blockchain capabilities in its core business and has already adopted the technology in selection processes. Just like how Enterprise Resource Planning (ERP) burst efficiency through integrating internal business processes within a company context back in the ‘90s, we are now revolutionizing ways of working by adopting blockchain technology to integrate business processes between enterprises, suppliers, and third parties, and customers.
Here are two blockchain use cases that are transforming transactional processes across our value chain today:
Trade finance: Blockchain technology and Letters of Credit
Global trade can be a complicated process when importers and exporters from various parts of the world need transaction verifications before they can complete the trade finance transaction. Blockchain speeds up the process by giving all parties access to documents and records as soon as they process them.
The solution enables real-time visibility and reduction of manual paperwork while improving traceability, and efficiency in handovers of assets or goods, as well as reducing working capital levels.
