Blockchain for Digital Identity in the B2B World
The B2B world is all about efficiency. How can Solution X solve Problem Z? How can Enterprise Company A be more efficient, cut paperwork, speed up transaction times, and optimize increasingly-complex supply chains?
To date, all of these core business issues have been addressed with the application of a patchwork system of hardware and software solutions that leaves company data exposed and vulnerable. These diverse and often-overlapping systems have been the norm…forever… but the business world is finally waking up to the risks of traditional approaches to identity and security. Insecure transactions, user data breaches, hacks, and more, have businesses thinking differently. A big part of that new of thinking is Blockchain data security.
The Blockchain Awakening
Google, Amazon, IBM, HP, Microsoft, Oracle and SAP are just a few of the many enterprise companies offering Blockchain-as-a-service (BaaS), and that number will only increase. A 2018 survey of business leaders by Deloitte shows broad acceptance and optimism about blockchain-based solutions. 65% of respondents said their organization planned to spend one million U.S. dollars or more on blockchain tech in the coming year. 16% of respondents reported a planned investment of more than $10 million.
The reasons are simple – Blockchain data protection offers a new paradigm of data management, security, and efficiency.
Blockchain in Fintech
Traditional paper-based business practices are slow, vulnerable, and expensive. Blockchain technology can be used to speed up the process for completing transactions, increase security around identity and validation, and cut fraud.
End-user parties in any given transaction can identified and verified, transfers can be traced back to the source, and all parties can rest assured everyone is receiving what they should be – whether that be money, services, or anything else. In fact, the Australian Securities Exchange is already using blockchain.
Transactions that once took days or weeks can be reduced to mere hours – and it’s all down to the data integrity that Blockchain can provide.
It’s not just for transactions, though.
In early 2018, Northern Trust bank worked with PwC, a global consultancy, on a platform for private equity fund auditors to get instant audits of funds and activities of fund managers. Here’s more from the Coindesk story on the project:
By using the software, auditors of a private equity fund will be able to see read-only files in near real-time when shares are bought and sold between general partners and limited partners, when investment firms call for capital promised by investors, and when capital gains are distributed.
The auditors can either transfer the required data into their own applications to complete the audit process or develop their own tools to audit directly from the blockchain. Permission to audit the various funds will be controlled by smart contract technology for which Northern Trust says it has a patent pending.
This is significant, and gets to the heart of two of blockchain’s biggest value points – efficiency and transparency. Simplifying workflows, cutting down on paperwork (and physical paper), and automating repetitive tasks are inherently valuable to businesses of all sizes. Being able to do all this while at the same making these processes more trustworthy and transparent only adds to the benefits.
The central idea of the Northern Trust-PwC project could be applied to countless other industries and use cases. Real-time verification, auditing, and compliance are issues that governments and businesses have struggled with…forever…as essentially every person on Earth already knows. But, with this technology, banks, corporations, hospitals, and other institutions that rely on verified identification could verify in seconds what can now take hours, days, or even weeks – plus, the untold man hours that are wasted pushing paper around.
You Are Who You Say You Are
PwC, as it happens, also launched a pilot program with the Institute of Chartered Accountants of Scotland (ICAS) that uses blockchain to make it easier for companies looking to hire accounts to verify credentials in the screening process.
Smart Credentials is a platform, underpinned by blockchain, that gives the owner of a credential control of their data, while also simplifying the process for regulators or institutions who issue credentials, as well as the reviewers who need to check them.
In this pilot, the owner is the recently qualified chartered accountant at PwC; ICAS issues the digital certificate to that person and it will then be part of their digital wallet and can be updated with ongoing personal development and be shared with others on request in a safe and secure way.
This is an ideal use case for blockchain, and an approach that can be applied to other identity-verification challenges. Here’s a little flowchart they put together:
The identity-based company Civic is also active in this space, offering blockchain-based identity solutions for businesses and consumers alike. Now, they are trying to create a marketplace where people and businesses – and really other organization – can essentially trade on their verified information.
At its heart, the Civic protocol is built around the idea that users control their own data: – “your information sits on your device, not on our servers,” as Lingham explains it.
Identity.com will serve as a hub for businesses that have information and those that need it. So, rather than one company selling data about its users directly to another firm, the first company that can verify data would share that attestation with the user, who would then share it with the second firm that needs the information.
The blockchain allows the company receiving the information to verify that the attestation held by the consumer is legitimate.
Many different companies might be able to, for example, verify that a specific user has a valid driver’s license, but other companies might have different levels of trust in each other.
So, Identity.com will be a place for companies to set up relationships and have a means to tell consumers whose attestations they will trust.
The implications become apparent pretty quickly. It’s easy to imagine a world of efficiencies for B2B firms immediately in the form of smart contracts and relationship management, and it just flows from there.
Supply Chain Clarity
It’s easy to think of digital identity in terms of a specific person, but the same principle can apply to anything – from a single apple to a sports car.
Even the most-common technologies we use – cars, phones, TVs – have remarkably complex supply chains. With blockchain technology, the provenance of every component can be verified back to its origin via records recorded to a distributed, verified ledger.
In the Deloitte survey mentioned earlier, 84% of respondents said that the automobile industry was the industry most-likely to be disrupted by blockchain technology. Auto industry insiders seem to agree.
The reason is simple. Toyota says that there are roughly 30,000 individual pieces of material in every car. Not counting individual nuts and bolts, the number of components in the average consumer car is close to 2000. One faulty piece in the supply chain can cost carmakers millions in recalls and repairs. With blockchain technology, as piece moves through production, changes are hashed, logged, and committed to the ledger, eventually comprising a verifiable “identity” for each piece.
Blockchain data security gives suppliers and wholesalers confidence to guarantee the origin and evolution of their products, and industrial purchasers can prevent fraud, have more accurate records of purchases, and the entire transaction process between all parties can be remarkably simplified.
There are several other blockchain applications for the auto industry. Product recalls – which can both endanger lives and cost billions of dollars – can be executed faster and more precisely. Smart contracts can greatly simplify and speed up the sales process both for finished cars to end buyers and in supply chain wholesaling.
Here’s what Andre Luckow, BMW Group’s lead for blockchain and distributed ledger technologies, told Forbes:
We are convinced, however, that blockchains represent a real opportunity and will eventually break up the established, centralized market by making it possible to create more decentralized platforms and so give consumers more control over their data.
Simon-Kucher & Partners project potential revenues in the hundreds of billions of dollars by 2030 for the automotive industry from blockchain applications alone. Below is an infographic they put together (note that it is a German organization, so it is denominated in Euro).
Porsche is already using blockchain tech in its cars, Renault has already been using it for nearly two years for a digital car maintenance book, BMW is starting to use it to track parts and usage, and the list goes on.
Wrapping it Up
Digital identity is a key issue in the B2B world, and blockchain-based solutions are gaining traction – both for people and for goods and materials. Using decentralized networks and private keys to trade in trusted, verified information is already helping businesses work together far more efficiently than before, and we are still in early days.