Which sectors are most impacted by blockchain technology?

Blockchain has proven its usefulness in finance, but now entrepreneurs and businesses believe it will allow many more industries to transform and improve.

The use cases of a verifiable, transparent transaction of data are endless. This is because blockchain operates through a decentralised platform meaning it is resistant to fraud. Making it extremely appealing to various sectors, some of these being…

Financial services

Banks have been testing blockchain technology for some time now. 2018 has seen discussion move beyond the initial excitement of ‘blockchain will fix everything’ to a clearer and more considered view of its most appropriate use cases.

The technology could potentially transform the following areas: smart contracts, know your customer (KYC), payments, fraud reduction and customer management.

As most core banking systems are built on a centralised database, they have one point of failure rather than many, making them more vulnerable. GlobalData believes that blockchain’s distributed ledger would eliminate some of the current crimes being perpetrated online, as it stores, encrypts, and verifies every single bit of data in a transaction. In the event of a breach or fraudulent activity, it would be made immediately obvious to all parties that have permission to access the transaction data on the ledger.

The transparency and traceability of blockchain technology can also improve the effectiveness of loyalty and rewards schemes as part of performance management systems. After all, employee sentiment and use will only improve if rewards are actually delivered and companies and their employees can agree on whether a certain transaction has taken place.

Retail

Blockchain has risen to be an exciting new development across the retail sector. The authenticity of luxury brands has and most likely will always be an issue, with many convincing knockoffs available at much lower prices. Blockchain will help by tracking the data from the sourcing of materials to the customer’s purchases. This will then allow the customer to confirm authenticity and know what they are buying is genuine

Chinese e-commerce giant, Alibaba, is part of a consortium which has introduced a food tracing system based on blockchain technology.

The initiative, which includes two New Zealand-based companies, Fonterra and New Zealand Post, as well as Australia’s Blackmores and Australia Post, goes by the name of Food Trust Framework. It is using an immutable central ledger to achieve “end-to-end supply-chain traceability and transparency to enhance consumer confidence and build a trusted environment for cross-border trade,” according to a joint statement.

Alibaba’s Tmall Global marketplace incorporates various standards and controls to manage the supply chain process, including blockchain technology and product tagging with unique QR codes. The technologies will authenticate, verify, record and provide an ongoing ledger that is made public to report on the transfer of ownership and provision of products and goods.

Meanwhile, JD.com recently spoke about the role of blockchain during Singles’ Day.

Travel

Blockchain technology is compelling for the travel industry. The ability to cut out the middleman could mean higher profits for destinations which would be a huge benefit for developing countries. Also, the ability to cut out travel intermediaries like Expedia would save airlines and accommodation providers a significant percentage of the sale value.

Not only could blockchain technology benefit tour operators, but it could also potentially provide a digital ‘identity’ for individuals. The potential to verify individuals’ identity in one single transaction at the point of purchase could transform airport queues.

The world’s largest tourism company, TUI has announced plans to move all its data to the blockchain.

Friedrich Joussen, CEO of TUI Group, said: “It will be very difficult for intermediaries to have sustainable business cases. These platforms build reach by spending billions on advertising, and then they create monopolistic margins on top of what they have as sales and marketing. They do offer great sales and marketing. Booking.com is a great brand, but they create superior margins because they have monopolistic structures. Blockchain destroys this.”

The enthusiasm of TUI  is so great, it has added an animated film to its website, explaining how the tech works and how it will impact the travel industry.