Deloitte Challenge: Blockchain for Finance

Deloitte, the leading accounting firm, has released an article on Blockchain for Finance for CFOs as part of its Crunch time series.

In the article, Deloitte covers not only blockchain basics but starting on page 11 covers ‘Assessing blockchain opportunities’.

For each category, the article sets out the Strong fit use case for blockchain.

We take on this challenge.

A. Number of participants involved

Strong fit: Blockchain is an excellent solution when participants include multiple manufacturers, suppliers, customers, service providers, transportation providers regulators, and possibly tax authorities.

Credible meets this easily. It brings together not only an unlimited number of businesses but encourages all member of the financial community to contribute, validate and consume data. In particular credit scorers, traditional lenders, peer-to-peer lenders, insurance, government and more.

B. Complexity of business purpose

Strong fit: Groups of companies facing a broad set of complex purposes can benefit greatly from standing up blockchains across their trading ecosystems. Blockchains enable the management of things like asset purchases, financing, warranties, insurance, regulatory compliance, and public safety — in an integrated manner and all at the same time.

A strong fit. Credible looks to solve a number of business problems in the real world regarding (1) trust (2) information asymmetry (3) inefficient workflows (4) settlement (5) searching / sorting / filtering (6) collateral (7) financial marketplace and more. It is a full financial and credit data ecosystem for businesses.

C. Need for long-term recordkeeping and regulatory compliance

Strong fit: Blockchain is an excellent solution when many parties need to access, create, and maintain records over an extended timeframe (e.g., decades-long asset lifecycle or the entire lifetime of a patient). Also, for many regulatory considerations, blockchain is a reliable way to document and manage compliance.

Again, a strong fit. Credible is designed to support records spanning decades — after all a business’ name does not change frequently — as well as records that are short lived. The purpose is to help businesses build a credit history that reflects the behaviour over time and not just at a point in time. We believe credit history should be a corporate asset like any other intangible asset, like a brand.

D. The need for real-time transfer of assets or payments

Strong fit: Blockchain can eliminate the lag in payment cycles and asset transfer, which can help reduce cost, improve accuracy, and provide compliance efficiency. Additionally, the transparency of blockchain can help streamline trade finance or supply chain financing in a multi-party network setting.

Definitely. Credible supports a financial marketplace where financial products can be bought and sold, especially lending and insurance. It is necessary therefore for a lender to be able to acquire in real time a business’ credit assessment report from a 3rd party; and for a marketing research team to get underlying data on a number of businesses in a geographic area. The real time settlement and flexibility of the token model is key to allowing such a financial marketplace to work in practice.

Final thoughts

We do not believe that there is a strong use case for blockchain where there is a single company in control of the ultimate destiny and use. It should be a technology like the internet that enables innovation to also happen on top of the platform; and the governance structure is decentralised. The blockchain creator (in our case SmartPesa) should be able to no longer be involved and still the blockchain goes from strength to strength. We, being SmartPesa, intend to do exactly this — give up control — as part of our drive to empower businesses and to reinvent credit scoring in a decentralised way.

For a comprehensive write-up on Credible’s envisioned marketplace, download our White Paper.

Questions? Comments? Do reach out to us on one of our channels.

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