In the last one year, blockchain has risen to be a major disrupting force in the world of finance. Although the technology is being used to manage data in complex supply chains such as healthcare and logistics, the disrupting impact is being seen in the BFSI sector.
What blockchain brings to the table is its ability to provide absolute data immutability as each new block created on the chain updates all previous data in real time.
Carrying this conversation forward, Shantheri Mallaya, Executive Editor at IDG Media, sat down with leading cybersecurity security leaders from Indian BFSI- Mithilesh Singh, Lopa Mudraa Basuu and Allwyn Pereira for a panel discussion titled "Is Indian Enterprise Blockchain-Ready?". The panel elaborated on the various use cases of blockchain and the challenges ahead for enterprise adoption.
Is Indian Enterprise Blockchain-Ready? Watch the panel discussion at IDG Security Day & CSO100 Awards. Prefer to read the edited excerpts? Read on.
Centralized to decentralized ledgers
The panel started with tracing the evolution of blockchain and how cryptography gave birth to decentralization of financial ledgers. "Prior to core banking services, banks maintained manual ledgers of records and blockchain is the extension of those ledgers wherein we are seeing centralization to decentralization of bank ledgers over distributed networks. Banks, along with their respective tech partners have started to create private blockchain consortiums for payments and trade finance use cases. By removing the intermediaries, automating the process and better security, blockchain will lead to reduction of costs involved in payments, trade, KYC, etc.," stated Mithilesh Singh, Head of Technology Audit, IDFC Bank.
Regulation is key for enterprise adoption
Discussing the way forward to have blockchain technology being deployed at the enterprise level, the panel of experts said that it would happen once there is regulatory clarity over the guidelines. The panel explained how governments across the world have been looking and experimenting with various Proofs of Concept (POCs) using blockchain. "Like any other new technology, blockchain is going through an evolution cycle. There are regulatory challenges present and unless the regulators give their go ahead, enterprises will find it difficult to adopt blockchain," said Lopa Mudraa Basuu, Global Director IT Risk Operations - Ocwen Financial Solutions. "Unfortunately, the regulators throughout the globe have not yet clarified guidelines for enterprise blockchain; at the R&D side of the regulators, there have been many POCs using this tech," added Mithilesh Singh.
Blockchain to solve the issue of trust
Allwyn Pereira, Director- IT at Sutherland Global Services stated that blockchain will find pervasive use cases in the enterprise because it solves the issue of trust among multiple stakeholders without the need of a central intermediary. "With the kind of efficiency blockchain brings in, it's going to be used across all sectors because this technology solves the problem of trust. A huge use case is in cybersecurity, where it can be used for solving lack of trust and managing identities. Imagine having no central authority to trust and requiring affirmation from all participants to access resources and execute privileges," said Pereira.
Apart from addressing the issue of trust among the various stakeholders, blockchain can enhance the traceability of data, whether at the enterprise level or the individual level, the panelists said. "One of the default characteristics of blockchain is immutability, meaning you cannot modify data and track all activity related to a particular set of data. This makes traceability much easier, which enhances KYC/AML requirements in the finance sector. We can also have real-time audits at the enterprise level using blockchain," explained Lopa Mudraa Basuu.
Is blockchain as foolproof as it promises?
When asked if the technology is really as foolproof as it promises itself to be, the panelists stated that no technology is foolproof in an ideal sense. Even though blockchain increases the difficulty level of a security breach, a malicious attack can still be organized to bring down a distributed network.
"No tech is foolproof and with wide use case, the efficiency of enterprise blockchain will further evolve to make it harder to breach or modify data. There are still human interfaces, infrastructure interfaces that will need to be trusted to make blockchain function. If somebody is able to breach the point where the token is generated, it will impact the entire blockchain because trust is generated at the point of tokenization," elaborated Singh.