The blockchain and big data – two of the coming trends for businesses in the digital era – which could be very helpful for one another.
The rise of blockchain
The blockchain market is growing rapidly. A report from The World Economic Forum and Deloitte predicts that investment in small contracts alone could potentially equal 10% of global GDP by 2027.
Citi, JP Morgan and Goldman Sachs are just some of the big companies joining forces to invest in start-up Axoni which is trailing blockchain technology.
The big advantage of blockchain is that no single player owns the data entry. However, its sanctity is verified. Information remains the same and safe, for as long as the network exists. Parties can transfer data from one to another without intermediaries in a secure way. It creates an immutable, autonomous and secure record.
Transparency of information
The blockchain works in the same way as a ledger. Participants can search and view records of every transaction ever made. However, unlike other storage mediums there is no centralised base for the data. Instead it is shared across networks of computers each of which can check and verify changes being made.
It is a brand-new approach to data storage and establishing trust and is much harder to hack. Since its appearance nearly ten years ago it hasn’t fallen foul to cyber-attack. The same can’t be said of financial institutions, as the hack of Equifax shows. The attack not only compromised its customers, but it also left the company facing greater regulatory scrutiny.
For this reason, major companies and financial institutions are placing this at the heart of their cyber security strategies. Lockheed Martin is one of the biggest names so far to throw its eggs into the blockchain basket.
A major challenge of data sharing can be multiple touchpoints and intermediaries. If there are two touch points on a customer’s journey, that could create separate sets of data which could work against one another. Health companies see this as a great way to securely share patient records, but it also has tremendous potential for financial services.
Sharing information between departments adds to operational agility and transparency to the entire operation. It reduces the risk of duplication and provides all operators with enhanced transparency.
Costs can also be reduced. As things stand, banks must find trusted intermediaries to manage the transfer of data. However, that trust comes at a cost. Financial transactions typically also attract a transfer fee which is not necessary when using the blockchain.
Contracts will also be streamlined. By their nature contracts operate on the basis that neither party can be fully trusted. With a fully autonomous technology such as the blockchain, there is no need to trust the other participant.
A technology of the future
Much of what’s being discussed is potential. Many of the chances are still to come, but if it truly fulfils its potential the blockchain will prove to be one of those rare things: a genuinely transformative and disruptive technology. The potential for all sides is enormous.