How Insurance, Healthcare, And Banking Is Being Disrupted By Blockchain
Healthcare, banking, and insurance are just three industries that anticipate tens of billions of dollars in cost savings from the blockchain’s permanent decentralized ledger. As a result of blockchain, banks, for example, expect to generate more than $27 billion in cross-border settlements alone by 2030, according to a 2018 study.
At its most basic, a blockchain is a distributed, digital ledger with built-in security that records transactions among the network participants in real-time. Every 10 minutes, these transactions are verified, permanently time-stamped and stored in a block that is encrypted and inextricably linked to the preceding block — creating a blockchain.
Participants don’t need to trust that the ledger has not been tampered with because entries are trackable and irrevocable. Another advantage of blockchain technology is business efficiency. Participants can execute smart contracts without a central controlling authority. The contracts trigger when pre-arranged terms and conditions are met.
These benefits and others — like data quality and transparency — have made blockchain the go-to technology for digital transformation. Also, blockchain is the underlying technology that fosters the required trust to enable companies and entire industries to transform around data and successfully implement other transformative technologies like artificial intelligence (AI) and the Internet of Things (IoT) — And it’s already disrupting multiple industries in tangible ways.
Insurance: Creating A Smart Ecosystem
In the property-casualty insurance industry, real progress is being made to create ecosystems that speed up the automobile insurance claims process — and the potential payout is huge.
Participants with access to the secure environment include third parties like car repair shops, tow truck companies, state motor vehicle departments, and law enforcement agencies.
This type of ecosystem would streamline tedious and costly processes. Consider the following scenario: After a minor two-car collision, sensors in the vehicles would send alerts to the blockchain network, triggering pre-arranged smart contracts among the parties to dispatch tow trucks, which would take the cars to designated repair shops. At the same time, other sensors measuring the speed and braking of both vehicles, as well as data on weather and road conditions, could send this information to the blockchain, whereupon it would be instantly determined which party is likely at fault.
All that data is a goldmine from an analysis standpoint. A smart contract between the two insurers of the vehicles may eliminate the need for a claims adjuster to go to the scene of the accident. The claims process would automatically spring into motion, possibly with the claim being filed and paid that day or the next one.
Healthcare: Building Trust And Slashing Costs
That’s just one industry. The four key benefits of blockchain that have transformational potential across business sectors — enhanced transparency, revenue, efficiency, and engagement. There’s friction within every process related to the various interactions with counterparties, customers, regulators and even the gathering of data. These inefficiencies are costly, but blockchain networks obviate these challenges.
A case in point is the healthcare sector, will be a vastly different enterprise in the next five to 10 years. Today, payers like health insurers each have specific contract terms and conditions that must be met in order for a procedure or treatment to be deemed medically necessary and, therefore, covered by the insurer’s health plan. These terms and conditions could be turned into smart contracts and added to blockchains, eliminating the inefficiencies involved in verifying permissible insurance coverages.
Another benefit of this transparency in healthcare is streamlined and reliable billing. Blockchain helps ensure a patient isn’t charged for the same medical procedure by two different physicians or hospitals. The technology verifies the accuracy of each transaction, which becomes a permanent, immutable record.
Health insurers benefit in other ways. For instance, an insurer can verify the necessity of medical treatments prior to execution and re-validate that they were in fact performed. Blockchain also addresses the problem of rising insurance claim denials.
Banking: Streamlining Verification
Banks are also poised for blockchain-enabled transformation. Only 3 percent of bank executives expect “minimal change” from blockchain technology in the next 10 years, with the remaining 97 percent anticipating modest to significant change. In addition to streamlining the mortgage approval and closing processes, blockchain technology proposes similar process enhancements in the disbursement of funds for commercial loans and syndicated loans.
As businesses initiate blockchain strategies, they need to pursue a measured approach that begins with an evaluation of how the technology will provide a competitive advantage.
For companies, adapting to the confluence of technologies involved in tomorrow’s ecosystems requires thoughtful consideration — and, in many cases, raises concerns about risk. As the volume of IoT devices proliferates to reach 125 billion worldwide in 2030, and remarkable tools like machine learning become smarter through exponentially expanding computing power, only blockchain technology at the moment presents a system of trust in data — And it’s no wonder why so many industries have taken noticed.