The year 2020 is not exactly what the world had bargained for. The organizations have not only struggled to keep their heads above the water but also been on the lookout for solutions that can enable them to do ‘business-as-usual’, as the case was during pre-Covid days. The pandemic has resulted in two major outcomes;
Firstly, the existing ‘trust gap’ among businesses has magnified because of various factors such as a rampant increase in fake news, entry of fraudulent or counterfeited medicines in the supply chain, and lack of flexible and transparent payment systems.
As we are on the cusp of the new year, the challenge is far from over and in fact, it seems that it will multiply even further going forward. For instance, with the successful trials of Covid-19 vaccine and several countries and pharma majors in the rat race for claiming higher effectiveness of ‘their’ vaccine over others, the imminent challenge around addressing authenticity, transparency, and secure distribution of the vaccines to all the citizens around the world will be critical.
Secondly, the pandemic has pushed the majority of employees to work remotely and depend on digital technologies and tools for collaborating with their peers and customers globally. Especially for the technology companies, this would have served as a ‘mirror in the face’ where they would have received direct feedback on the impact of their internal digital transformation methodologies at play.
Blockchain as a technology has the ability to reduce the ‘trust gap’, drive digital transformation for enterprises and help them eliminate inefficiencies, improve profitability, and do ‘business-as-usual’ faster.
How Blockchain Can Address Trust Deficit and Drive Digital Transformation in Various Industries?
The pharma industry has hogged the limelight in the face of the pandemic. The governments, regulators, and billions of global citizens the world over are eagerly waiting for the successful trial and rollout of vaccine for the novel coronavirus. The pharma majors, on their part, have been working day-in and day-out with Clinical Research Organizations (CROs) on drug discovery. A blockchain-based network connecting the pharma organization, CROs, and the regulator can fast-track the research process and ensure transparency.
The issue of counterfeited drugs has been on the rise during the ongoing pandemic. This needs immediate redressal as it directly impacts the brand image and customer safety. Further, on successful vaccine discovery, the pharma majors will be challenged to ensure effective distribution of the vaccine globally. With World Economic Forum (WEF) estimating around 20 billion vaccines to be distributed, experts opine that we will need to build one of the largest supply chain capacities ever built.
Blockchain combined with the Internet of Things (IoT) will ensure that businesses will not only be able to track and trace the journey of vaccines in the supply chain, but also ensure that they have been preserved in ambient conditions and meet the regulatory guidelines for safe consumption.
With 90% of aircraft leased globally, the airline financiers (‘lessors’) need more transparency and visibility on airline maintenance history to make investments. However, they seldom gain access to this data as it is recorded in manual spreadsheets and cannot be trusted upon. With aircrafts lying in the hangar during the ongoing pandemic, the ‘trust gap’ that already existed between the lessors, the lessees, and the maintenance repair organizations has actually widened.
Blockchain can be a key enabler to reduce this trust gap through digital transformation. Blockchain-based digital systems can replace antiquated methods like manual spreadsheets and Electronic Data Exchange (EDIs) in a trustworthy, immutable, and transparent way. The system would onboard key stakeholders – the lessor, the lessee, and the financial institutions onto a single connected platform and provide real-time updates on maintenance history. With built-in analytics capabilities, ‘Lessors’ can make strategic decisions regarding fleet expansion. Increased visibility into aircraft’s operations and maintenance history will enhance investments into the aviation sector.
Banking and Finance:
Blockchain has been traditionally used in invoice discounting and supply chain finance in banking and finance. In the pandemic, a lack of both physical exchanges of documents and flexible payment options have had an adverse impact on global trade. The small and medium businesses, in particular, have been severely impacted and the trade volumes are at an all-time low.
Traditionally, the suppliers discount their invoices from banks to gain access to short-term cash and fulfill their orders. In absence of trust, banks are not able to discount the invoices leading to either canceled orders or deferred deliveries. Blockchain, on account of a common distributed ledger, provides a single source of truth to all stakeholders – buyers, suppliers, and banks and automates invoice discounting, ensures payment commitment, and drives trade finance between global buyers and suppliers.
Even in supply chain finance, blockchain can help enhance trust and transparency by improving inventory visibility for buyers and ensure timely invoicing and billing with nth level suppliers.
While these trends are more industry vertical focused, we will also see some generic trends on buyer behavior and product development coming to the fore in 2021.
There will be a transition from PoC (proof-of-concept) and pilot led engagements to enterprise-grade implementations in 2021. Organizations will understand that Blockchain is a technology and not a solution by itself. It is a component of the solution and hence for every business problem, the solution may involve design thinking combining blockchain with other next-gen technologies like Internet of Things (IoT), Cybersecurity, Data & Analytics, and Artificial Intelligence/Machine Learning (AI/ML).
In 2021, Decentralized Finance (DeFi) will capture the mindshare of enterprise technology leaders by creating a new financial system that is open to everyone and does not require intermediaries like banks. DeFi could offer a reliable and secure alternative to a centralized finance system with reduced complications. Lastly, Central Bank Digital Currencies (CBDCs) will emerge as a potent weapon and used by countries to mitigate financial crimes, counterfeiting, and tax evasion attempts.
- The author of this article is Rajesh Dhuddu, Blockchain and Cybersecurity Practice Leader, Tech Mahindra