Blockchain is Shifting Data and Risk: Here’s How it Can Benefit Your Bottom Line
By Joseph Weinberg, Chairman, Shyft International
Many companies have a hard time with managing data and how it moves across organisations - or more commonly, how it doesn’t. The result is that big corporations and large financial institutions like banks often end up unintentionally segmented into silos. They then operate de facto as several smaller companies - with data becoming the source of the divide.
This siloed data presents a serious security risk that we’ve read about all too often, but even more so, it becomes an enormous resource-drain and investment. With complexity of compliance and regulations rising, databases multiplying, and costs sunk into maintenance and upgrades of cybersecurity infrastructure, companies’ ability to manage risk deteriorates and negatively affects the bottom line. We all know that risk often ends up costing companies money. So how can organisations stop the loss, or better yet, turn it into a potential revenue stream?
Traditionally, companies estimated risk based on potential regulatory issues (among other considerations) – in other words, what happens if a company is caught in a reporting irregularity. But there’s another figure on the balance sheet that CFOs have been hesitant to look at: the price of security to counterbalance the risk.
This conversation is now evolving drastically compared to conversations a mere five years ago. Technological and procedural factors are rapidly changing the traditional risk model, adding further dimensions. Security must now be incorporated into risk calculations in some capacity. Compliance can no longer be hidden and distributed within the balance sheet - it’s now an increasing cost.
New generations of companies are working hard to fix the problem of the ever-increasing risk and costs associated with data, many of which are applying the decentralised nature of blockchain to help. This is all well and good. But at Shyft, we are taking a slightly different approach by building an ecosystem backed with distributed shared systems and strong encryption design to solve privacy and security problems by changing the way that data is used, stored, and transmitted, both within the walls of a single institution and beyond.
What’s really interesting is that this solution offers those who bear the responsibility for holding the data – and therefore have the potential to share it with appropriate consumer consent - the ability to generate revenue in the process.
In the future, we can expect to see these blockchain-based networks distribute risks, cost, quality assurance and processes across ecosystems that are more efficient. The role of compliance will continue to change to fit the needs of the consumers and companies they work for, as these systems become prevalent.
For example, our network turns both the fixed and increasing costs of compliance into a business in its own right, by providing a true picture of the costs of compliance data across companies’ internal silos, and ecosystems, along with market incentives. This allows organsations not only to find efficiencies, decrease risk and cybersecurity profile, but also to monetise existing know-your-customer (KYC) and data-gathering and verification processes, departments and databases in new ways.
This kind of technology also facilitates thinking about compliance locally, whilst acting globally; it’s about preserving the best practices in any one jurisdiction, at the same time as eliminating borders and silos to benefit the overall ecosystem and facilitate attested data exchange.
In summary, it’s clear that blockchain will continue to shift and optimise data, risk, and compliance structures. And if your company is looking to accelerate risk and security management capabilities, open up new revenue streams, and change the way data impacts the bottom line, the time to jump on board is now.