Why blockchain benefits highly regulated industries
Industries that are heavily regulated are typically subject to regulation because industry participants require protection. Regulation lends an element of assurance and trust to industries such as finance, insurance, and healthcare. Regulated industries are highly transactional too, with banking and finance as a prime example.
Blockchain has a revolutionary capacity to boost trust and security for all parties because the decentralised nature of blockchains ensures greater transparency and traceability. Blockchain also has the potential to hugely increase the efficiency of transactions because data can rapidly and securely be transmitted across the blockchain.
The bottom line is that blockchain can make it easier for regulated industries to stay compliant while ensuring ongoing operational efficiency. Efficiency leads to higher profitability while an environment of trust reduces the risk of costly disagreements and data breaches.
Industry examples of blockchain use cases
Blockchain is an incredibly malleable technology and looking at specific examples is the best way to understand just broadly blockchain can be applied to regulated industries. Here are a number of top examples in different regulated industries:
- Healthcare. Easy access to patient records is key to quality care but patient records are inevitably fragmented. The stiff regulation around the transmission of patient records and the disjointed nature of patient record storage means that these records are not always shared as efficiently as possible. Blockchain’s distributed ledger system is emerging as a solution to centralise patient records while at the same time ensuring only authorised parties have access to confidential data. Early examples include a startup called Iryo that is implementing a blockchain platform to store the medical records of refugees.
- Banking and finance. The transactional nature of financial services leaves plenty of opportunities for blockchain use cases to step in. From smoothing the kinks in trade finance to making clearing and settlement more efficient and secure, blockchain has outstanding applications in finance. Bank guarantees are just one example: distributed ledger technology can remove the need for the physical management of paperwork. Simultaneously the standardised nature of blockchain eliminates the need to manually review the terms and conditions of a guarantee.
- Insurance. Blockchain can be a powerful actor in insurance, underpinning the trust factor that is so important in the insurance business. Blockchain’s security characteristics and the universal visibility of transactions is a perfect match for insurers. With blockchain, the immutable nature of data means it is far more difficult to commit fraud, a major concern for insurers. Blockchain minimises the chances of contracts getting altered, of counterfeiting and of double claims.
- Energy management. Utilities are facing ongoing challenges in trying to operate as efficiently as possible. At the same time, energy companies need to adapt to an increase in transactions as millions of solar-powered users start pushing energy into the grid. The net result is that transaction costs are of increasing concern to utilities, and several blockchain efforts are attempting to use distributed ledger technology to help companies cope with transaction volume and to reduce the need for brokers.
- Pharmaceuticals. The complex pharma industry stands to win from blockchain in several areas, from improved logistics and safer manufacturing to better inventory management. Yet is perhaps the complex drug development process that will benefit the most. Clinical trials are one of the most onerous stages of drug development and blockchain can substantially improve the process. A decentralised ledger can make sharing patient data vastly more efficient while ensuring all stakeholders are continuously updated as to the status of a trial.
The blockchain benefits for your company
We’ve outlined prime examples of blockchain business ideas that can drive trust and efficiency across a wide range of regulated businesses. Yet there are still many undiscovered applications of blockchain and a technology partner is essential to help your business discover the benefits of blockchain.
ELEKS can assist you to make the most out of blockchain, including more recent developments such as smart contracts.
Reach out to us. We can apply an existing blockchain use case to your company, or find a unique blockchain application that can give your business the competitive edge.
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