Blockchain use cases for FinTech/Insurance

The World Economic Forum published a report entitled, Deep Shift – Technology Tipping Points and Societal Impact. By 2025, 58% of these experts and executives believed we would hit the tipping point for Bitcoin and Blockchain. This was defined as – “10% of global gross domestic product will be stored on Blockchain technology”. Blockchain has the potential to improve the way insurers’ record risk, increasing the speed, accuracy and transparency of our processes. Blockchain offers a decentralized register of ownership by recording every transaction in the system, from creation of a block and through any number of transfers made. Every computer tapped into the system stores a copy of this Blockchain, and before a transaction can be made the system checks that their version of the Blockchain is in sync with all other versions in the network.

The potential applications of Blockchain technology stretch from wealth to health. Financial institutions, including Barclays and Allianz, are now considering how this technology could revolutionize financial services by tracking assets, automating processes and recording the transfer of value.

Blockchain use cases for Insurance

  • Smart Insurance Contract – Smart contracts powered by a Blockchain could provide customers and insurers with the means to manage claims in a transparent, responsive and irrefutable manner. Imagine an insurance policy where claims are paid automatically as soon as a loss occurs and without the need for a claims assessor. Contracts and claims could be recorded onto a Blockchain and validated by the network, ensuring only valid claims are paid. Insurance companies spend over several billions each year on fraud and compliance. There is tremendous use of Blockchain to improve the claims process. Claims-handling could become more efficient and streamlined, resulting in an improved customer experience.
  • Counter Fraud – Fraud is a very real problem for insurance companies. High value assets can be fraudulently registered as stolen, insurance companies pay out, and then the asset registered with a new insurer for the process to be repeated. By using Blockchain to create a decentralized ownership ledger for these high value assets, registered using certificate number and laser inscribed ID number on the diamond itself, it will be possible to recover these items once they resurface.
  • Online digital deal-rooms that could considerably modify the way business are conducted globally. Digital deal rooms will define how documents can be securely shared and logged. A Blockchain-based deal-room would strip out the need to trust an intermediary while providing an accurate record of the documents shared by the deal’s participants. It gives you a database that’s unalterable and nobody owns. It’s a ledger of who sent what to whom, when, forever. That’s an important part [of the insurance process
  • Piracy prevention of Digital Assets – Piracy can also be combatted by tracking ownership of digital assets. Current DRM technology often requires that a song you purchased from iTunes can only be played through an Apple device. By using a decentralized ledger for ownership of digital content the ownership of digital assets can be authenticated across platforms, and can be transferred securely to new parties when sold.
  • Peer to Peer insurance – Blockchain will also give rise to P2P insurance in which policyholders’ pool together, based on a sharing economy concept, and support each other financially in the event of any claim. But instead of a policy managed by people who process applications for new policies and applicants for new claims, the peer-to-peer insurance would only be managed by smart contract code, significantly reducing costs and expediting pay-out thereby significantly increase policyholder experience. Additionally, Lower operating costs are the biggest beneficiary for insurers.

The possibilities are endless and it is for the insurance companies to invest, explore and experiment with the different use cases. The regulatory compliance will also be a considerate issue which will get addressed in coming years.




Blockchain for Dummies!

Many companies are accepting bitcoins, many are not. Here is a list. These include Target, Tesla, Whole Foods, Microsoft, Home Depot, Intuit, Dell, PayPal/EBay, Sears, and many others.  With many companies accepting the change and others getting ready to, bitcoins are an extremely fast-spreading currency. The crypto-currencies have multiplied in the market place in recent years. QR codes are the biggest help in real-world bitcoin transfers. Using a smartphone and a Bitcoin wallet app, a user scans a label and presses a small buttoned aptly named “spend.”

Every transaction that happens between a buyer and seller or a transferor and transferee or between 2 members on the network, is verified and validated by “miners” to ensure it is secured and there is no risk of double spending. These miners are similar to VISA or MasterCard or Amex of the credit card world that provides a platform to exchange, validate and authorize. The miner creates a block of records which holds a copied record of all the verified transactions that have occurred in the network over the past ‘n’ minutes. Each transaction in every block is made at specific time and linked to previous block of transactions. Digital records are lumped together into “blocks” then bound together cryptographically and chronologically into a “chain” using complex mathematical algorithms. This encryption process, known as “hashing” is carried out by lots of different computers. If they all agree on the answer, each block receives a unique digital signature. The groups/chains of these blocks of transactions is referred to as Blockchain. The Blockchain is seen as the main technological innovation of Bitcoin, since it stands as proof of all the transactions on the network. Blockchain, or distributed ledger, technology is more secure, transparent, faster and less expensive than current financial systems. The distributed nature of a Blockchain database means that it’s harder for hackers to attack it – they would have to get access to every copy of the database simultaneously to be successful. It also keeps data secure and private because the hash cannot be converted back into the original data – it’s a one-way process.

In short, Blockchain is a method of recording data – a digital ledger of transactions, agreements, contracts – anything that needs to be independently recorded and verified as having happened. The big difference is that this ledger isn’t stored in one place, it’s distributed across several, hundreds or even thousands of computers around the world. In 2015, some of the leading financial institutions such as Visa, Goldman Sachs, Citi and other Wall Street incumbents joined venture capital firms to pour $488 million into the industry. In a World Economic Forum report released in September, “Deep Shift: Technology Tipping Points and Societal Impacts,” 58% of survey respondents said that they expected that by the year 2025, 10% of global gross domestic product will be stored on Blockchain technology. If banks started sharing data using a tailor-made version of Blockchain it could remove the need for middlemen, a lot of manual processing, and speed up transactions. If banks and other financial institutions are able to speed up transactions and take costs out of the system, it should mean cheaper, more efficient services for us.


Start your Internet of Things ‘IOT’ project

IDC estimates that as of the end of 2013, there were 9.1B IOT units installed. IDC expects the installed base of IOT units to grow at a 17.5% CAGR over the forecast period to 28.1 billion in 2020. The number of connected devices is growing at an astronomical rate these days as more and more manufacturers jump into the fray. From Nest thermostats to water sensors to connected home, it’s no surprise that firms like Morgan Stanley are predicting the number of connected IOT devices will approach 75 Billion by 2020. So what makes up this IOT market?

  • IOT Platforms
  • IOT Sensors – Connected Home, Connected Auto, Connected Work, Connected Life, Connected Consumer
  • IOT Devices, Monitors, Controls, etc.
  • IOT Applications and Mobile Apps
  • IOT Network and Connectivity
  • IOT Analytics
  • Social Business
  • Weather Data
  • Consumer data – Health, Locational, Interactions, etc.

But what does this all mean for the manufacturer? What do they need to consider when laying out their connected device strategy.

The IOT is still at an early stage; the connected market has started over a decade back to monitor and control every information from physical and social environments. In the past, most of these units were hardwired together into a complex system but with wireless connectivity, mobile/telematics, cloud, analytics, intelligence and other technology advancements, the birth of IOT took place. For example, the Nest Learning Thermostat performs the basic function of an ordinary smart thermostat: It monitors, adjusts and maintain as per predetermined configuration. But the Nest also senses humidity, activity, and light, and its built-in intelligence “learns” how and when the user likes to adjust the temperature. It can even optimize the house’s temperature for energy efficiency. All this, together, still doesn’t make the Nest part of the IOT. But when it’s connected to an insurance company or the Nest Account (hosted by Google, Nest’s parent company) through a home Wi-Fi network, it has far greater value. That connection allows people to monitor and change the temperature from their smartphones, modify the heating schedule, and analyze their home heating activity. It also allows insurance companies to offer incentives for precautionary and timely alerts preventing losses.

Organizations are now accumulating terabytes and petabytes of data from various devices – machine, mobile, user, web logs and cookies, social media, etc. The challenge is not in storing this information, but in actually using this data for competitive advantage. Organizations are rushing to store this wealth of information fearing missed opportunities. This takes us back to the key questions: what, where and how do I start?

The key to winning the race to competitive advantage is not by storing all or most of the data, but by deriving value and insight that can be tied to a business outcomes, ROI and profitability. Here are the high level steps I recommend to begin your big data journey:

  1. Identify business use cases tied to business outcomes, metrics and your IOT roadmap
  2. Identify business champions and sponsors of your organization that can lead the IOT as business initiative
  3. Select right set of people, processes, technology including platform, solutions for your IOT project
  4. Build a lab – IOT Lab that can prototype different solutions and integration points. Use point solutions for speed to market and cost considerations but plan to build or buy or rent the underlying IOT platform before the system becomes overly complex with many point solutions
  5. Be Agile. Execute your project/POC in sprints or short projects with tangible and measurable outcomes that either increases efficiency, enhance customer experience, reduces cost, prevent losses or increase revenue
  6. Plan for the security and privacy of the data. Consider and simulate the risk of data breach.
  7. Build on small successes and integrate with your data platform and operational applications that will empower your field sales and customer representatives to use the insight to delight your customers

This is a journey and not an end or a destination. Improvise your processes, technology and finally train your people as ‘Connected World’ is here to stay and grow.