Blockchain Innovations That Can Change The Industry Including Insurance
Latency. That seven-letter word takes nearly seven seconds to say and what feels like forever to settle. In simple terms, latency is the delay before data is moved. In the banking world, latency is the time it takes for money to move across a ledger, which is a book of accounts where transactions are balanced.
According to Merriam-Webster, the word “ledger” comes from the English dialect form leggen, meaning “to lay.” I don’t believe there’s any denying that money sometimes sits, lies or ostensibly takes a nap when we need it most. Think of all those times you’ve deposited a check into your bank account and have had to wait days to access your money. Issues like these are painful. In fact, as MarketWatch reported, it’s likely you’ll only be able to access a fraction of checks you deposit until the respective banks release their hold.
Another area I believe the banking industry is lagging on is money management services. It’s still common for brick-and-mortar banks to have someone in a suit selling financial services and advice. I feel people should just as easily be able to log in to their mobile device and download a financial app to eliminate the need for that type of in-person service.
Similarly, some insurance companies are still using expensive, commission-driven salespeople, while artificial intelligence (AI) and smart contracts could potentially determine the needs of a consumer and spin up a contract, payments and the delivery of benefits faster, cheaper and better.
With that, you as an innovator can ask yourself: How can I work to speed up and improve the movement of money, information, and services to eliminate the wait? Let’s take a look.
Digital And Mobile Banking Revolution
Around the Great Recession of 2008, many millennials were coming of age and expressing their dissatisfaction with the status quo through movements like Occupy Wall Street. At that time, one could also observe a rise of distrust in banks.
The opportunity for businesses lies in innovations that eliminate latency, inefficiencies, costs, unnecessary processes and procedures, error resolution, data corruption, and security hacks. The results of these innovations could include restored trust, which would be a win-win for both financial institutions and their customers.
Over the past decade, you will notice that the financial industry has witnessed a gargantuan pivot from traditional banking methodologies to financial-technology-driven applications. Millennials, with Gen Z on their heels, may become the reigning economic powerhouse over the medium term — Pew reported their adult numbers will likely outnumber baby boomers’ in 2019. They’re thinking differently about how they bank. In a world where financial institutions are competing with innovations where you can order a ride or takeout with the push of a button, they need to be thinking about how to make financial solutions available just as quickly.
While the $200-billion-plus cryptocurrency market catapults us light-years into the future technologically, there’s still work to be done. For example, large banks, brokers, securities firms, clearing companies, money transmitters and so on, seem to be at the early stages of tapping the power of blockchain technology, distributed ledger technology (DLT), smart contracts, artificial intelligence, machine learning and other technology to change the future and security of money.
Blockchain In Insurance
One of the areas where innovators can begin thinking about using technologies like blockchain would be in the insurance industry, as noted above, to create reliable registries, expand the payment infrastructure, offer microinsurance, automate contracts and payments and to evaluate claims. The benefit would be a boost in customer trust, speed and the ability to drive and compress costs on an operational level. At the end of the day, it could also reduce fraud.
We believe blockchain in insurance is a lot further along in ideation than reality. That’s where innovators come in like us, Inmediate: to harness the power of this technology and close the gap between ideas and implementation.
Blockchain In Finance
Imagine blockchain implementation in a system like the Automated Clearing House (ACH) as a shared distributed ledger technology that all banks could access. If that happened, it would basically become an interledger — a protocol for connecting blockchains and ledgers — that could introduce immutable data and eliminate all kinds of latency.
Blockchain In Identity Protection
We’ve all heard about the Equifax hack, and we know identity verification is one of the biggest challenges we face globally. Now, imagine a world where blockchain stored all your information. I believe blockchain could not only store a person’s ID in the future but that it could also be an immutable solution that integrates a lot of information (like biometrics and addresses) into one system, which could make it harder for a person’s identity to be stolen. This is one of the most powerful blockchain applications I see that innovators should be thinking about.
The dark side of this, however, is that if someone did figure out how to break in, it could be catastrophic. That is our great unknown.
The most interesting aspect of blockchain to me is the structure, which is different from what we have experienced over the past 20 years with the explosion of the internet. HTML’s single stand-alone protocol was used to create the container that held all the websites on the internet. It seemed protocol-thin and application-heavy. The blockchain is different to me; blockchain is protocol-thick and thin at the application level so it may require a re-engineering of the mindset to implement. I believe we must think of ways to innovate using blockchain because we’re trained to build at the consumer (application) layer, while blockchain is all about establishing protocols.
To adopt a blockchain mindset, imagine this: You step away from your LaFerrari and start operating a tunnel-boring machine. The blockchain is not about innovating beauty; it’s about building a balanced foundation that can change the world.