Blockchain, XBRL and the Future of Reporting
We know that XBRL has the power to transform the reporting landscape, thanks to the advantages it offers when it comes to data accuracy, comparability, and transparency.
These advantages have also been recognized by regulators such as the SEC who, over the years, have increasingly adopted XBRL or Inline XBRL as part of their reporting processes.
However, XBRL isn’t the only technology with the potential to shake up corporate and regulatory reporting. Hot on its heels is an emerging technology known as blockchain.
The benefits of blockchain
While blockchain is typically associated with cryptocurrencies, Bitcoin being one well-recognized example, blockchain has the potential to be used in other areas as well, notably in financial and regulatory reporting.
For example, earlier this year it was reported that the “Big Four” professional services firms – PWC, Deloitte, Ernst & Young, and KPMG – were working with 20 Taiwanese banks to test out blockchain technology to see how it can be used as part of the audit process.
In another significant step, the European Commission is also launching the European Financial Transparency Gateway (EFTG) following a proof of concept that used blockchain technology. According to a press release from the European Commission in March 2018, the EFTG:
“links existing national databases through distributed ledger technology. This blockchain-based gateway is a simple and affordable way to share information on listed companies, fostering cross-border investment activity and contributes to a well-functioning Capital Markets Union.”
If the European Union can see the benefits of leveraging blockchain technology within the reporting landscape, then it may only be a matter of time before other regulators around the world begin to follow suit.
Can blockchain and XBRL work together?
Any rise in the use of blockchain for reporting purposes doesn’t necessarily spell the end of XBRL reporting. In fact, there are ways in which the two technologies can work alongside each other to improve reporting processes.
For example, according to XBRL International, at the recent Data Amplified 2018 conference there were demonstrations of how Inline XBRL and blockchain could “automate and enhance insurance contract management with “smart contracts” embedded into the system.”
Blockchain needs more time
Although the prospects of blockchain are exciting, it’s also important to note that there’s still a way to go before such technology is likely to be used more broadly within financial and regulatory reporting.
Not only is this due to the fact that the technology is relatively new, but it is also because any companies that may decide to make use of blockchain would need to update their internal systems and develop blockchain processes to support the technology, which would cost both time and money.
Despite such constraints, the benefits that blockchain could bring to the reporting landscape are exciting. Now it’s a case of waiting to see whether the technology’s full potential will be utilized by companies and regulators alike.
DataTracks has over a decade of experience in providing XBRL and Inline XBRL reporting solutions for businesses across the world, including the SEC in the United States, and regulators in the United Kingdom, Ireland, and India. For further information on how DataTracks can help with your regulatory reporting, speak to a member of the team on 1800-937-9280 or email firstname.lastname@example.org.