Future Tech & Innovation6 min read

Blockchain: What Business Leaders Really Need to Know

Blakely Thomas-Aguilar

Look at any major tech news site, and you’ll see blockchain listed as a top emerging technology. It’s also a rising priority for organizations globally. In fact, a 2020 Deloitte Insights report revealed that 55% of surveyed senior-level executives said blockchain “will be critical and in our top-five strategic priorities” in the coming two years.1

Next-gen enterprises move beyond company boundaries to deliver value to customers and partners by harnessing end-to-end, cross-industry workflows. This requires a single source of truth, for which blockchain is well-suited.

Worldwide spending on blockchain solutions is forecast to be $4.1 billion in 2020, an increase of more than 50% compared to 2019.

International Data Corporation (IDC) Worldwide Blockchain Spending Guide2

What Is Blockchain?

Blockchain creates something called a “distributed ledger.” It’s very similar to a general ledger used in financial operations or like your personal checkbook. Debits in the left column, and credits in the right column. It’s distributed to all parties involved in the transaction, so everybody gets a copy. Even business rivals can collaborate on the same distributed ledger because of its built-in privacy with integrity.

The parties involved can be companies that operate independent general ledgers. Without blockchain, these separate general ledgers exist in siloes. With blockchain, however, an immutable and secure distributed ledger can be created and maintained by a network of companies.

What Does Distributed Trust Mean?

Blockchain creates and distributes “trust” among all parties for a transaction, powered by a distributed trust infrastructure. It simplifies processes and establishes seamless trust by guaranteeing that everyone’s ledgers are all the same. No one can make changes unless everyone agrees. And when agreement is reached, everyone’s ledgers are updated with the exact same information at the exact same time.

Another key term is “multi-party workflow,” where companies and individuals work together. Popular examples include:

  • A transaction between a buyer and a seller.
  • Movement of funds between one bank account to another bank account.
  • Supply chain management and operations.

Distributed Ledger Technology (DLT) promises a new, more efficient process that potentially reduces the cost of infrastructure. At the same time, the emerging tech can potentially solve a major challenge facing all industries in our digital age: trust, privacy and confidentiality.

“DLT can provide a way for participants to share information in a way that maintains privacy and confidentiality, but also shares a single source of truth to reduce overall cost for non-productive activities,” said Horacio Barakat, vice president of corporate strategy for Broadridge Financial Solutions.

How Can Business Leaders Use Blockchain Technology?

Much of the blockchain interest is being driven from the top down into IT. As shown in the Deloitte study, senior executives are incredibly interested in blockchain. Distributed trust infrastructure could solve business problems that haven’t been solved by other technologies or processes.

Across industries, leaders want to take manual or digitally disparate processes and streamline those significantly. Warranty claims offer an example of very manual processes with multiple parties: buyer, manufacturer, distributor and claims department. All have disparate data sets, rules and processes that often conflict today. This could be quickly streamlined by a chain of records that all match perfectly for everyone in the blockchain consortium.

The same concept applies to insurance, government, online retailers, hospitals and transportation. Basically, any service that requires multiple parties—and that’s pretty much every business today in our digital world—can and eventually will benefit significantly from blockchain.

Financial services, with all the different data sets and records, is perhaps the most used example.

Why Is Blockchain Particularly Relevant for Financial Services?


Accenture estimates that 90% of banks have funded blockchain pilot or production programs.3 Why? All financial services transactions are multi-party workflows.

Banks are in the business of sending money to other banks in a secure, trusted manner. Each bank is a node in a network of banks. Even the simplest financial services transaction is a multi-party workflow. For example, let’s imagine that a consumer is about to pay her $50 grocery bill with a Visa debit card. How many parties are involved?  At least five:

  1. The consumer
  2. The consumer’s bank
  3. The grocery store
  4. The grocery store’s bank
  5. Visa

Now, imagine the universe of financial services companies:

  • Banks
  • Broker-dealers
  • Investment managers
  • Payment processors
  • Insurance companies
  • Industry utilities or clearinghouses
  • Government-sponsored entities
  • Central banks
  • And many others

Complicated rules govern the funds flowing among these many financial services companies. Also, regulators and auditors need to review financial operations data on a regular basis. DLT helps streamline and simplify these flows. It also helps streamline and simplify reporting and auditing.

Another important capability of blockchain is “smart contracts.” These computer programs automatically execute, control and/or document legally relevant events and actions according to the terms of a contract or an agreement. With smart contracts, financial transactions can be streamlined, radically eliminating manual processing. Smart contracts also automate reporting and enable real-time auditing.

Blockchain in the Real World: Co-Innovation Spotlight

A powerful financial services case study is the Australian Securities Exchange (ASX).


For more than 25 years, ASX has used its proprietary Clearing House Electronic Subregister System (CHESS) to record and manage shareholdings and transactions. However, the legacy system is now past its prime. Originally designed to support 25,000 trades per day, today’s CHESS has evolved to meet the demands in a constantly changing market ecosystem, said ASX CIO Dan Chesterman.

ASX needs a new solution that supports growing trading markets—locally and globally:

  • Meets high resilience and stability benchmarks.
  • Reduces risk and cost in its user operations.
  • Enables the benefits of secure data sharing, while protecting its customers’ privacy.

So, the company is turning to DLT.

“When we determined that we needed to replace CHESS, we looked around, but there isn’t a shrink-wrapped system that can be easily implemented. We recognized that significant investment was needed,” Chesterman said.

There’s an opportunity with emerging technology to transform the way data is shared, preserve privacy and confidentiality, and remove manual processes that exist in the industry.

Dan Chesterman, CIO, Australian Securities Exchange

The ASX team set forth on an audacious project to transform the way it conducts its billion-dollar business. They realized that partnership with experts was the best path forward. Chesterman and his team are working with Digital Asset and VMware to co-innovate their new DLT solution. They’re also tapping a number of specialist consulting and solution providers, who are creating software that can leverage the distinctive capabilities of this modern infrastructure.

“(Financial services companies) are significant businesses with significant implications as to what happens if these businesses don’t open in the morning and deliver the value to those markets. Because of that, just using native blockchain for those apps wouldn’t work,” said Yuval Rooz, co-founder and CEO, Digital Asset.

“The stack is very complicated. When we started our approach, we actually developed our very own blockchain. Very early on, we started realizing that there’s going to be this very clear separation throughout the stack, where companies like Broadridge or ASX are going to be at the top of the stack,” Rooz said. “They’re going to develop these applications. They’re going to operate them. They’re going to offer these products to their clients.

“Then, we thought about the language layer that will be used to build these applications. In our opinion, there’s not going to be one ledger. And, therefore, this abstraction will be called the ledger, and the application should have this clean separation,” he continued.

“At the bottom you have this distributed ledger—the infrastructure that’s going to drive these apps. Each one of these layers requires its own expertise, its own knowledge. So, when we found out VMware was working on blockchain, we were bullish on creating this partnership to bring our expertise together with VMware’s expertise. We saw that that combination would be really powerful.”

Watch this on-demand VMworld 2020 session to learn more about the co-innovation between ASX, Digital Asset and VMware.

Blockchain: Emerging Technology or Solution for Today?

Like so many innovations before it, blockchain is new. And like all the new tech innovations before it, that means risk. Standards haven’t been developed. And according to leaders surveyed in the Deloitte study1, there are many adoption challenges, including:

  1. Replacing or adapting existing legacy systems (35%)
  2. Potential security threats (34%)
  3. Concerns over sensitivity of competitive information (34%)
  4. Lack of regulatory clarity (32%)
  5. Lack of in-house capabilities (skills and understanding) (31%)
  6. Challenges in forming a consortium (31%)
  7. Burdensome regulatory environment (30%)
  8. Uncertain ROI (29%)
  9. Lack of a compelling application of the technology (29%)
  10. The technology is unproven (27%)

Since you don’t do blockchain alone, interoperability is vital. Vendors like Microsoft and Oracle are coming out with blockchain solutions, but companies don’t want to get locked into a single vendor. And if members of a consortium run different software or languages than other members, you have a major compatibility issue.

“For me, the difficulty and the challenge we need to solve for is creating the necessary network of participants that actually agree on a new way of doing things and a new way of communicating,” said Barakat.

Barakat believes that partnership and collaboration is the best way to take blockchain and DLT from an emerging technology to a new standard.

There’s a common misconception about innovation. Critical to driving innovation is to bring new ideas from the lab to the market at industrial scale—enterprise scale. It’s simple to think about innovation as this grand idea, and people are just going to rally around it. For me, innovation is a methodical process. It’s deep understanding of the market and the infrastructure that supports that market. And that’s where co-innovation comes in.

Horacio Barakat, vice president of corporate strategy, Broadridge Financial Solutions

He points to the three key elements of expertise needed to bring blockchain to broad, enterprise-grade adoption:

  1. The “grand idea” (aka the new technology)
  2. The understanding of the market
  3. The enterprise-grade infrastructure to deploy at scale

“Those three pieces, that is the co-innovation. You wouldn’t be successful without any of those three pieces,” Barakat said.

Learn more about VMware Blockchain.

1. Deloitte Insights. "Deloitte's 2020 Global Blockchain Survey: From Promise to Reality," 2020. https://www2.deloitte.com/content/dam/insights/us/articles/6608_2020-global-blockchain-survey/DI_CIR%202020%20global%20blockchain%20survey.pdf
2. International Data Corporation (IDC). "Worldwide Blockchain Spending Guide," 2020. https://www.idc.com/getdoc.jsp?containerId=IDC_P37345
3. Accenture Digital. "Blockchain Technology: How Banks Are Building a Real-Time Global Payments Network," 2016. https://www.accenture.com/t00010101T000000Z__w__/fr-fr/_acnmedia/PDF-35/Accenture-Blockchain-How-Banks-Building-Real-Time-Global-Payment-Network.PDFla%3Dfr-FR%23zoom%3D50