Blockchain contains what everyone in data management, from data scientists to chief data officers, wants: Information that comes with complete provenance. That means data showing who did what, when, and with a full history from Day One; data that is verified by many third parties, transparent, with complete reconciliation, and secured by the latest in cryptography.
This is a major step forward from today’s culture of underlying spreadsheet processes.
Ah… the spreadsheet. Want any number in particular? No problem. Couple of clicks and the unit, area, region, or group meets its target or stays within the guidelines. Sure, in three or six months’ time the numbers at the top level may not balance with the auditors, but hey ho.
Spreadsheets are prolific throughout financial services. There are even systems designed to take data and show it to look like a spreadsheet. Many staff members are familiar with spreadsheets; they know what they like, and few like change. However, with spreadsheets, not only can the figures be changed, but this usually happens with no record of who made the changes.
Unattributed changes cannot happen with blockchain. Every entry in a blockchain is recorded by time and by who made the entry. This information is distributed to the people in the chain, including authorized regulators, every time a change is made. Each change is completely transparent and verified by many third parties. Blockchain numbers are true and transparent.
We have all heard the phrase “garbage in, garbage out.” The quality of data available across the many silos of a financial institution is a mixed bag. Often, because of legacy systems and the incongruity of new data elements, information exists in many different places across the enterprise. Given that 64% of banks have two or more data warehouses, with 18% having 11 or more warehouses (Banking Technology, September 2015) and many special standalone databases, finding the right data at the right time is complex. With Blockchain, it is simple—there is only one source.
The precise content and value of Big Data (90% of the data in the world has been created in the last two years) may not be apparent until it has been properly analysed. This reverses the typical information governance approach by allowing access to minimally governed data while ensuring that new data insights become fully governed before they are applied to enterprise decisions. The proliferation of available sources increases the risk of untrusted data entering the governed information landscape, undermining insights. Blockchain provides only trusted data.
Confidence in data management insights output would soar as blockchain gains ground. Even the few blockchains at present represent a moment of truth. By comparing data sourced from a blockchain to that generated elsewhere, a sense of realism can be achieved.
Reference data projects using blockchain are underway. SWIFT, for example, is working on Standing Settlement Instructions for payments (SSIs) and has reported 10% changes in SSI in a quarter. Similarly, fintech companies are working on blockchain Legal Entity Identity (LEIs) to separate the information needed on LEIs to meet legal compliance.
Data management is the new science, as demonstrated by the opening of the UK’s Alan Turing Institute in October 2015. The institute, headquartered at The British Library, has a mission that includes creating new business opportunities in the “Age of Algorithms” using digital data. Blockchain data, with its attributes built on the foundations of great data management, stands to become a supreme friend.
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