Why blockchain is not a solution looking for a problem
Setting out on the blockchain path, the best place to start is with a clear business case
Many multi-actor ecosystems such as conveyancing, audit, and identity management are ripe for disruption. Photograph: iStock
If think about it hard enough, blockchain could probably be used for almost every business process but it might not always make sense to do so. “It’s still in its very early days,” says Cillian Leonowicz, director of business development at Deloitte’s Dublin-based EMEA Blockchain Lab. “We need to educate people and get them to think outside of the cryptocurrency world. It’s not just about currency.”
He advises businesses to look at the processes they need to carry out and see if they are suited to blockchain. “If you have multiple organisations collaborating on one thing, and [they] need to see the same things, you might need blockchain. But start with the digitalisation piece, you might need AI and machine learning first. Blockchain shouldn’t be a technology looking for a solution. I wouldn’t advocate that approach.”
According to Eoin Fitzgerald, senior development adviser for fintech with Enterprise Ireland, blockchain is applicable almost anywhere there is a requirement for traceability. “Take-up will probably be a bit slower in financial services,” he adds. “If you think about payment systems, there are lots of actors involved and [that] makes it difficult.”
Trade finance is a very good use case, however. “The TradeIX platform is a good example of this,” says Fitzgerald. “The company is using distributed ledger technology to get rid of the paper involved in trade finance and moving assets and credit around the world.”
Another area where he sees opportunities for the technology is overseas aid and he points to Irish Times 2018 Innovation Award winner Aid:Tech which is using blockchain technology to ensure that aid is fully traceable from the point of giving right the way to the individual who receives it.
“The only solution in some parts of the world is handing out vouchers on paper,” Fitzgerald says. “They have six projects running in different parts of the world at the moment. There’s a big opportunity there for people who want to ensure that aid goes to the right people. The supply chain is another area of opportunity. Exertis Supply Chain Services is looking at implementing a production blockchain to transform the technology product supply chain and is collaborating with the Cedar technology centre on that with support from the Disruptive Technologies Fund.”
In the 2019 KPMG Technology Industry Innovation Survey, 48 per cent of respondents thought it was likely or highly likely blockchain would change the way they do business in the next three years, but 24 per cent stated that a challenge to adopting blockchain was down to unproven business cases.
“We could infer from this that, while many companies have invested heavily to explore blockchain’s potential, a lot of the business cases are yet to be proven,” says KPMG management consulting partner Owen Lewis. “Organisations should, of course, determine the right-use cases to focus on avoiding hype and not jumping on to the bandwagon where many are still beating the ‘solution looking for a problem’ drum.”
He advises companies to move forward with well-defined selection criteria, a structured innovation process, and a clear route to production that can quickly bring value to the organisation.
“There is no doubt that many multi-actor ecosystems such as conveyancing, audit, and identity management are ripe for disruption and blockchain combined with artificial intelligence, IoT and broader digital capabilities is certainly well-placed to be the one of the key ingredients,” he adds.
Developing a clear understanding of the technology and its potential is the best starting point, according to Cristina Carrascosa Cobos, blockchain counsel at law firm Pinsent Masons. “Some companies organise training sessions for employees and executives so that they can understand how the technology works and consequently, identify which areas could see improvement using this technology. At the end of the day, no one knows better where there’s room for improvement than the members of the organisation.”
Ulster University professor of cybersecurity urges a cautious approach nevertheless. “A good deal of healthy scepticism is always good when it comes to encouraging adoption of any new technology.”