An Introduction to Blockliance
Blockliance is the first application to be built on the IAP platform, which you can read more about in our Introduction to IAP article. Focusing specifically on regulatory compliance, it provides an excellent illustration of the many use cases of the IAP platform. In this article, we will explain what it is, what challenges it addresses and why it is well positioned to capture a share of the multi-billion dollar GRC market.
I. Governance, Risk Management & Compliance (GRC): A $22bn Market Ripe For Disruption By Blockchain
With the wave of ICOs that have taken place in 2017 and 2018, there are now few major industry sectors that remain untouched by the blockchain revolution. The most obvious use cases like data storage, supply chain and distributed computing have seen multiple projects battling for supremacy, whilst new all-purpose smart contract platforms and currency coins emerge almost every week.
One multi-billion dollar sector with a very clear blockchain use case, which no project has yet capitalised on, is regulatory compliance. This is particularly noteworthy as compliance has become an increasing priority for large scale enterprises with a proliferation of regulations including ISO/IEC 2700X, PCI-DSS, GDPR and ITGC creating mounting costs for the world’s biggest companies.
The global Governance, Risk Management & Compliance (GRC) market was valued at $22.11bn in 2016 and is expected to grow at a CAGR of 12.7% from 2016 to 2025. Meanwhile, financial institutions in the US alone have had to pay out more than $160bn in fines for failing to meet compliance standards.
To give an idea of the scale of the market opportunity, McKinsey & Company report that Global payments revenues grew 11% in 2017, the highest rate in 5 years. PCI-DSS compliance is required of 100% of these payments providers, who on average spend $225k pa on auditor costs alone, with average global corporate spending on compliance at $3.5m pa.
The GRC sector in Asia Pacific in particular is set for rapid growth due emerging regulatory pressures in multiple fast growing economies, with the regional market expected to grow at a CAGR of 14.2% from 2017–2025.
II. How Blockchain Can Address The Key Challenges Of Compliance
It is not just the size of the market that makes compliance such a sorely over-looked opportunity for the application of blockchain technology. It is also the fact that the challenges it creates are ones that are exactly the kind of things that blockchain is perfectly positioned to address.
Currently, the processes for meeting compliance requirements, verifying compliance status and assessing the effectiveness of your existing compliance measures are costly, time consuming and complex.
This comes down to the fact that each of these processes is currently extremely manual and relies on multiple specialised experts and disparate processes. Quality assurance depends on trusted specialists and verifying claims requires a laborious chain of interviews, checks and interrogations. Meanwhile there is no practical way of collecting the vast streams of metadata necessary to measure the success and effectiveness of these processes.
Because the key feature of blockchain technology is its ability to provide trustless verifications and automate complex processes, it is ideally situated to address these challenges.
III. How Blockliance Provides A Solution To These Challenges
This is exactly what Blockliance intends to do. As the first blockchain application specifically focused on compliance, it harnesses the power of cryptography to make compliance processes simpler, cheaper, more predictable and less time consuming.
Blockliance has been described as an “attestation and verification engine”, but in reality it is more like an affordable, friendly robot version of the expensive compliance consultant that companies hire to solve their audit problems.
Built on the IAP platform, Blockliance is a distributed multi-chain ledger platform that will utilise the IAP to solve the key compliance challenges discussed above.
By utilising the unique ability of blockchain technology to provide trustless verification of claims, Blockliance will be able to provide transparent proof of regulatory, legal and financial compliance claims in an automated way, which is not reliant on manual verifications by trusted specialists and complex processes. It will do so by providing 7 key features that provide solutions to the challenges described above; namely it will:
1. Maintain up to date requirements, schedules and metrics of the
Frameworks, regularly comparing requirements to corporate systems
2. Facilitate the easy gathering of evidence in the form of documents, files, system configuration, audio, video, images and anything digital as input
3. Create an identity for this data that is non trust reliant so that auditors can instantly trust it
4. Provide proof of procedure (& operations), proof of existence, proof of trustworthy computation and proof of device state, all of which will be independently verifiable.
5. “Freeze” (once approved) the proof on an Evidence Chain in a way that maintains “Chain of Custody” in order to secure enough for everyone up to and including a court Judge.
6. Allow auditors to verify the data from anywhere in the world, more quickly, opening the market up to the entire globe and saving costs accordingly
7. Guarantee the time and date of data in a way that is unchangeable (it’s “frozen”) but still updateable and deletable if desirable
By doing so, they will be able to save time and money for every stakeholder involved in compliance claims and verification.
Companies themselves will be able to take a technology-driven approach to quantifying and predicting costs and ROI thereby saving time and money and more effectively managing risk. Inexperienced staff can quickly tackle complicated compliance projects with the assistance of Blockliance Artificial Intelligence.
Auditors will benefit from being able to implicitly trust claims that have been facilitated by Blockliance’s trustless blockchain, therefore removing the requirement for further validations.
Meanwhile, the platform will provide regulators with valuable metadata and clear metrics on the impact of rules and changes they implement. In turn the risk and security metrics provided by the Blockliance platform will have important network effects for the industry such as increasing its insurability.
IV. How Blockliance Will Achieve Rapid Adoption: Leveraging A Network Of Existing Partners Including Multiple Leading International Accounting Firms
On paper therefore, Blockliance addresses the key challenges faced by a multi-billion dollar industry, which have a clear cut blockchain use case that has not yet been exploited.
However, many blockchain projects are finding that whilst they may have identified a powerful use case, the tangible business case for prospective platform users is not sufficient to stimulate widespread adoption. Blockchain-based cloud storage platforms, for example, have failed to make a dent in Amazon and Microsoft’s market share as the tangible benefits are simply not big enough to make it worthwhile for users to shift to a relatively unknown new technology.
This is not the case for Blockliance. Rather than focusing on high-concept theoretical improvements, Blockliance’s solution focuses on the thing that prospective platform users really care about: driving down cost.
Existing regtech software is relatively unsophisticated. The lack of a trustless verification mechanism is holding back the industry. This is where Blockliance excels and a primary driver of its potentially massive cost-cutting abilities. Many blockchain solutions simply take an existing technology and turn it from centralised to distributed without adding any substantial new capabilities along the way. By contrast, because trustless verification and automation of processes are the actual challenges that the compliance sector is facing, the application of these features of blockchain technology instantly give Blockliance a competitive advantage over the incumbent solutions. This means it will directly drive down cost and thereby provide the incentive for adoption. As discussed earlier in the article, these are very real cost savings — with the average company in the target market spending $3.5m annually on the challenges being addressed.
Fig. Comparing Blockliance features to its next 5 competitors in the industry
Fig. Comparing Blockliance features to its next 5 competitors in the industry continued
Additionally, Blockliance has a unique auxiliary customer acquisition channel that will create a multiplier effect in the technology’s adoption. Because of the reduced costs and improved ROI, resellers are financially incentivised to resell Blockliance to their customers. This has led one prospective platform user to describe Blockliance as an “instant fit” for top tier accounting firms. This has already been demonstrated by securing multiple international accounting firms including BDO as partners as well as specialist compliance service providers like compliance consultants.
Furthermore, Blockliance will benefit from the wider ecosystem of partners secured by the IAP platform on which it is built.
Finally, Blockliance has an advanced roadmap to support rapid adoption, with the MVP scheduled to be ready as early as Q4 2019.
So, by providing tangible cost savings, leveraging a network of large multinational resellers and delivering on an accelerated roadmap, Blockliance has positioned itself to get real-life adoption in a way that few other blockchain projects have.
Conclusion
In current times it is increasingly rare to find a new blockchain project that provides a solution to a multi-billion dollar market as yet unaddressed by distributed ledger technology. Blockliance does not just this but also has a clear use case for the blockchain technology in a sector where trustless verifications and automated processes can provide tangible cost-savings compared to existing solutions. Finally, it has a clear route to market with multiple major international partners already secured and a reseller model that will multiply the rate of market adoption.
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