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Data governance has long been an important topic on the agenda of financial institutions. According to a study by Accenture, 98% of financial services organizations consider data governance important or very important for their long-term success. With a myriad of innovations and development over the past few years, blockchain technology stands to completely revolutionize the concept of data governance today.
In fact, a recent study by Blockdata shows that 81 out of the top 100 publicly traded companies have adopted Blockchain technology in handling financial transactions. Its decentralized structure and cryptographic techniques make it profoundly secure and transparent – making blockchain networks an optimal platform for storing confidential information. Although implementing data governance on a blockchain network is no small feat, requiring both technical aptitude as well as organizational competence, its capabilities are far too powerful to ignore.
In this article, we will dive deep into the essential components of data governance for blockchain networks. As you’ll soon discover, implementing effective governance of data is a critical component in ensuring secure and reliable blockchain operations. We will explore the benefits of data governance, challenges that may arise when establishing these rulesets, and provide guidance on building an optimal framework that meets your needs.
The Importance of Data Governance for Blockchain
Data governance is a system for managing and safeguarding data within organizations. It ensures the accuracy, comprehensiveness, and uniformity of information while simultaneously securing sensitive details from unapproved access or misuse. As blockchain networks become more popular, this process becomes especially crucial in preserving the veracity and safety of records stored on such platforms.
Poor governing of data can take a heavy toll on an organization, costing it time, money, and reputation. Institutions that fail to manage their data effectively may be at risk of missing out on a significant portion of potential profits. Studies from the Harvard Business Review have found this figure could even reach up to 10%. By implementing good governance practices, organizations can safeguard against bad decisions caused by miscommunication and uneven access.
Furthermore, organizations suffer losses when they are unable to capitalize on potential opportunities because of unreliable information about customers or markets. Poor data governance and quality are costing companies an average of $3 million per year, according to a study by the Ponemon Institute. This highlights that inadequate management of corporate-level data has significant financial ramifications. Ensuring proper data governance is essential for any business that wants to remain competitive and protect its assets.
Both public and private blockchain networks are cutting-edge, offering decentralization and distribution strategies to store data securely across multiple nodes. This makes it difficult for any single entity to control or manage enterprise data due to the lack of central authority overseeing all operations.
Moreover, employing smart contracts and decentralized applications (dApps) on blockchain networks can increase the complexity when it comes to governing stored data, as these programs might have their own guidelines in terms of controlling information. A recent Consensys study shows that 72% of users report greater trust in decentralized systems compared to centralized systems.
Challenges of Implementing Data Governance on Blockchain Networks
Establishing data governance on private or public blockchain networks is a complex process that requires technical and organizational expertise. Among the most significant hurdles are:
- Lack of standardization
There is currently no standardization for data governance on blockchain networks. This makes it difficult to implement consistent data governance tools or frameworks across different blockchain networks and applications.
- Complexity
Understanding the technically intricate blockchain networks can be a herculean effort for non-technical stakeholders. Furthermore, data integration and governance is complicated by smart contracts and dApps that may follow their own regulations to manage data.
- Scalability
Scaling data governance solutions to handle the abundance of information that can be stored and managed with blockchain networks poses a formidable task.
- Decentralization
What makes blockchain highly attractive in the industry is also one of the most significant challenges to widespread implement. Since blockchain networks are decentralized – meaning there is no single governing entity managing the data, it can be difficult to control or keep in pace with regulations or regulatory requirements. This makes establishing and following consistent policies for governance across the network a complex task.
Best Practices for Building a Robust Blockchain Data Governance Framework
To build a robust data governance framework for blockchain networks, it is important to consider the following best practices:
- Develop a data governance program/strategy
Achieving success requires a well-executed plan. Create a comprehensive strategy that outlines our goals, objectives, and the policies to implement to meet them effectively.
- Involve stakeholders
To ensure maximum alignment with organizational objectives, stakeholders across the organization should be included in data governance deliberations. This collective approach will help to foster a comprehensive framework that meets all needs and ambitions of the company.
- Implement technical solutions
Implement technical solutions, such as data encryption and access controls, to protect sensitive data and ensure that only authorized individuals can access the data.
- Monitor and audit
Regularly monitor and audit the data governance framework to ensure it is working as intended and that any issues or problems are identified and addressed promptly.
- Continuously improve
Continuously improve the data governance framework based on feedback and lessons learned to ensure it remains effective and relevant over time.
What the Future Holds
All in all, implementing data governance on blockchain networks is key to ensuring the credibility and safety of information stored on it. Unfortunately, this can be a tricky one as it necessitates both technical and organizational competencies. To ensure a robust data governance structure, organizations should craft an extensive strategy that involves stakeholders from all areas, incorporate technical safeguards for sensitive information, and evaluate the framework regularly. By doing so, businesses can successfully deploy data governance onto their blockchain networks to fully capitalize on this cutting-edge technology’s potential.
Tagged:
- digital transformation, global
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Omar Mansur, Global Enterprise Lead & Managing Director - APAC
A highly qualified Business Management Professional in the Financial Technology field with over 16 years of experience within the financial technology banking, retail and IT Industries, Outsourcing Sectors including exposure to Global Markets.
