The potential for blockchain technologies, the public ledger underlying cryptocurrencies like bitcoin, in the financial and public sectors are significant. Not only does the blockchain provide a transparent and tamper proof means of transferring money, it also delivers considerable cost savings potential on traditional methods. To take advantage of the commercial potential of the technology, PwC UK has launched a blockchain practice in Belfast, with a team of 15 already in place; by the end of the year the Big Four plans to have 40 experts developing and supporting FinTech players deploying the technology.
Blockchain technology forms the basis of cryptocurrencies such as Bitcoin. The cryptocurrency provides an encrypted permissionless distributed database that acts as the public ledger for all transactions. This ledger is stored on machines working as data store nodes extending validation to the ledgers stored on the network as a whole, providing a distributed means to harden the whole system from tampering and revision.
The technology has garnered considerable interest in recent years as a whole new way of ordering financial transactions that are independent of institutions while being highly advantageous in a number of theatres. The system, being distributed and self-validating, does not requires an authority to certify and clear transactions and the system is more resistant to fraud, as each transaction ledger is verified by a community of networked users. Furthermore, because of its peer-to-peer based structure, considerably less supervision is required, bringing down associated costs. Considering that there is a complete historical record that is publically accessible, there is a means of effective monitoring and auditing the network by participants, supervisors and regulators. Finally, end-to-end visibility across transactions is granted, which for the first time in the industry provides banks certainty as to when a payment will be delivered.
The demand for the technology is on the rise as a number of large players, including Mark Walport, the UK's chief scientific adviser, suggests that the technology has considerable potential to underpin transactions in the public services, including tax collection, benefits and the issuing of passports.
In a bid to capitalise on the potential, PwC has decided to bolster its capabilities in the field. The firm has set up a team that focusses on blockchain at its office in Belfast, as the consulting firm seeks to take advantage of the technology behind cryptocurrency Bitcoin to provide commercialised solutions. The consulting firm has already hired 15 specialists in the field and intends to expand its team to 40 by the end of the year. The deal follows similar moves by rivals – in October last year Accenture for instance inked a deal with Ripple, while also Deloitte, EY and KPMG have of late made larger strides in the broader FinTech space.
“There’s clear evidence that banks, institutions and even governments are looking at blockchain technology as a secure storage and distribution solution,” says Steve Davies, EMEA FinTech Leader at PwC. “Now there is growing interest and a real demand from our clients to help understand the implications of blockchain and how to respond to it. So, as the blockchain juggernaut continues to gather pace, PwC will be well placed to service our clients’ needs at a global level.”
Ashley Unwin, EMEA Consulting Leader at PwC, adds that the blockchain technology has the potential to be the single greatest advance in the FinTech sector in a decade: “Blockchain technology is worrying major players in the financial services industry as they don’t know where it will go or its potential to disrupt business models. However, in document delivery and settlement processing alone, it will offer significant cost reduction and efficiency gains.”
According to market research from Accenture, the global Fintech industry tripled over the past years. Ireland, and Northern Ireland, are considered as attractive locations for housing FinTech players, predominantly due to the availability of talent, and a solid infrastructure facilitated by the government.