SAN JOSE, Calif. — Blockchain – or the distributed ledger technology – is rushing out of test labs, and into real-life applications.
In fact, in the last quarter alone there were 50 publicly announced proof-of-concept projects, with more than 120 participants, according to CoinDesk.
Experts foresee that blockchain will take over money transfers, and will drastically reduce operational costs.
In fact, a recent study by the Post Trade Distributed Ledger Group (PTDLG) revealed that the top three benefits of distributed ledger technology will be operational cost savings, increased efficiency/ reduced settlement cycles, and transparency. That’s according to 45 PTDLG members surveyed, from organizations such as CME Group, Euroclear, HSBC, London Stock Exchange Group, and State Street.
Our own panel of experts highlighted three not-so futuristic applications of blockchain technology during the Bank Innovation 2017 conference on Monday.
1. Know Your Customer
The panel agreed unanimously that KYC will be the next “big thing” in blockchain.
Blockchain-based KYC systems will allow FIs to more seamlessly coordinate between multiple financial institutions and governments, Tim Swanson, director of market research at R3CEV consortium, said during the panel.
The KYC process requires financial institutions to acquire customers’ personal information, such as name and address, as well as financial information, including bank statements or tax returns. All of that happens at the customer onboarding phase, and can be frustrating or offputting. Every bank is also required to perform its own KYC, even if another bank has just completed the same task on the same customer.
Currently, financial institutions find it hard to create unique identifiers for consumers, which would be secure, private and traceable, Angus Champion de Crespigny, financial services blockchain strategy leader at Ernst and Young, told Bank Innovation previously. “With blockchain technology, you can have that traceable customer ID, and personal identifier solution,” he said. “Many financial institutions have invested to improve the [KYC] process, but having these tools will remove a lot of the headache.”
2. Operational Cost Reduction and Expanded Access
“The next few steps of blockchain will be about reducing costs and expanding access to financial services — basic extensions of business models,” Asad Ramzanali, senior manager of Financial Solutions Lab at the Center for Financial Services Innovation (CFSI), said during the panel. “Shortly thereafter we will start to see new developments altogether. I don’t think we have much idea of what that will look like quite yet. It’s now similar to the internet, and if we would sit in 1995 and try to pontificate Uber and AirBnB.”
On the operational end, call center invoicing is one of the use cases that’s already in the works for several FIs, according to Marco Bosma, SVP of fintech and innovation at Rabobank.
“We are looking at call center invoicing [through blockchain] to make sure that there is no fraud,” he said on the panel. With the DLT in place, customer care representatives will be able to securely authenticate customers in seconds, rather than by asking a series of questions.
3. Autonomous Vehicles
Not so much of a fintech use case, but one that holds a lot of potential, according to Deva Annamalai, director of innovation at Fiserv.
“Imagine a future autonomous car, which can drop you off in the morning, be an Uber during the day, and pick you up at night,” he said during the panel on Monday. Blockchain technology would make this possible by giving autonomous cars, as well as users, unique identifiers, and creating a secure trust protocol.
Additionally, DLT can help with the supply chain tracking needs of major OEMs, Brian Behlendorf, Hyperledger’s executive director, told Bank Innovation previously. “Major companies in the automotive industry are evolving rapidly towards a broader transportation and mobility position, where integrating your relationship with the customer across many different operations and partners is important,” he said. “Any of these could become interesting projects, and perhaps there are others we don’t even know about.”3 - Readers Like This Post