How blockchain will affect financial services employment

How blockchain will affect financial services employment

What influence will a disruptive force such as blockchain have on banking and finance employment?

Every so often, a fresh technological development comes along which revolutionizes the financial services industry. Not since the introduction of the internet – more than two decades ago – has any force promised to shake-up the industry with as much force as blockchain. The same technology behind Bitcoin, blockchain is now finding fresh applications in financial services.

But what influence will it have on the employment market?

For those unacquainted with the technology, blockchain can be thought of as essentially a digital ledger. Much like Google Sheets, the blockchain itself is a basic spreadsheet hosted from every user’s computer. The distributed ledger simply records transactions, then shares that information in a constantly-updated database that is loosely viewable by all users. It can be accessed, traced and verified against itself at any time by anyone with the software, thereby enforcing accountability and making fraudulent transactions much more difficult to perpetrate.

Blockchain’s influence on financial services

A technology as revolutionary as blockchain will undoubtedly have a major influence on the financial services landscape. Many herald blockchain for its potential to demystify the elaborate financial services industry, while also reducing costs, improving transparency to reduce the regulatory cargo on the industry. But despite its potential role as a precursor to extend financial services to the unbanked, many fear that its effect on the industry may have more cons than pros.

Industries including payments, banking, security and more will all feel the influence of the growing adoption of this technology. Profit centers that leverage financial inefficiencies will be stressed. Companies will lose their value proposition and a loss of sustainable jobs will go after. The introduction of blockchain to the finance industry is similar to the effect of robotics in manufacturing: switch in the way we do things, leading to fewer jobs, is unavoidable.

For example, four major financial institutions teamed up back in August to develop and implement the Utility Settlement Coin, a cash equivalent that will enable interbank blockchain exchanges. This clearly signals the banks’ intent to further develop and leverage blockchain technology in one way or another going forward.

Blockchain will cut headcount for some professions, but create other jobs

Of course, blockchain will undoubtedly influence those who work in the finance sector. Smoothing the contemporary workings of the industry will help firms cut a tremendous sum in operational costs – that means cutting jobs as well.

As a case in point, blockchain transactions require very little oversight in the way of processing reconciling; therefore, jobs in these fields will not be relevant with broader adoption of the technology.

Just as the internet shook up finance in the 1990s, broader adoption of blockchain means certain roles within the industry will vanish, while other fresh ones come into existence. Perhaps it’s more accurate to think that these occupations will evolve, rather than vanish.

Fresh roles in security fields like encryption and identity protection will develop, as financial services firms will still need to audit their records against blockchain to detect potential fraud or other threat sources.

A broader and more diverse range of careers will practice the same effect as blockchain develops and more applications for the concept are realized and put into practice.

One potential use for blockchain technology could be in home sales and mortgage lending – blockchain could streamline this process, impacting the request for real estate brokers and lenders.

Monica Eaton-Cardone of GRT

How blockchain will be used in the future

Blockchain, if used decently, promises to produce benefits to consumers, governments, banks and other financial institutions. By the same token, those who may stand to be displaced by blockchain need not fear being threw out on the street next week.

Tho’ the blockchain concept has grown a good deal since it was used in the very first Bitcoin exchange in 2009, it will be several years before we should expect any kind of widespread application.

One of the primary concerns will be ensuring security in blockchain technology to build broader confidence in the platform. Even if blockchain is already more secure than traditional payments, skeptics will hop on any chance to critique the distributed ledger. It will take time to build confidence in such a fresh and revolutionary idea, and any incident will be a larger setback than it would be for traditional payments.

Blockchain will need to be standardized and secured before the technology will love widespread adoption. However, I anticipate that by 2020, we will already begin to see blockchain making a considerable influence on financial services.

It’s difficult to predict exactly how blockchain will switch the game, but it would be wise to begin making plans now with the skill that the industry will see a dramatic shakeup soon.

Monica Eaton-Cardone is the CIO of GRT, as well as its U.S. subsidiaries Chargebacks911 and eConsumerServices. She is also the COO of Chargebacks911.

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Proponents of blockchain tout its potential to facilitate quicker, cheaper, safer and more semi-transparent financial transactions, but hurdles remain.

Credit Suisse is ramping up its blockchain initiatives with an eye toward cutting costs, but the technology’s potential to generate revenue is on the bank’s radar as well.

Lead photo credit: WoodyUpstate/GettyImages; pic of Eaton-Cardone courtesy of GRT

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