In 2018, blockchain technology was rated among the top five technology trends by the Gartner Hype Cycle for Emerging Technologies. The current focus, all thanks to Bitcoin and the cryptocurrency rage, has been on its impact in transforming the financial industry and trade.
However, several studies have shown how blockchain, as the biggest disrupter of the twenty-first century, has the ability to fundamentally transform any business that relies on an intermediary between two parties, i.e. a buyer and a seller, to extract economic rents from the value chain. There are some avant-garde projects currently in their beta-testing phase in several industries that are using blockchain technology to add value to their existing processes:
1. To tame and track supply chains in the logistics industry
2. To ensure secure, economical, and faster transactions in the real estate sector
3. Transfer of funds across borders and abroad in a faster, inexpensive, and hassle-free way.
Notwithstanding the few exceptions, we need to agree that unfortunately the businesses, whether conventional or not, are still least informed about the different types of blockchain technologies in existence today and the value they can add to their existing business models.
There’s a whole lot of sources that support blockchain’s potential to disrupt businesses but the question that scratches the surface is ‘how’. Let’s fizzle out a few bubbles for you. The pointers below present a clear picture of how blockchain intends to impact the various elements in a business model in the near future:
Building Customer Relationships
A business can segregate its customer segments based on the motivation behind them- whether to acquire or retain customers or else drive sales. For that, a firm can go for personal assistance, self-service, or automated services. Moving such transactions over the blockchain can provide the transparency and immutability necessary to build customer trust and loyalty.
For instance, ChromaWay has helped Lantmäteriet, the Swedish government’s land registry authority, in streamlining the process of real estate buy and purchase over the digital ledger. The government authority is involved at every step in the process while the information stored is also up-to-date, easy to access, and secure, further boosting the confidence of the citizens in the government.
Transforming Key resources and Activities
Every business requires physical, financial, and human resources to make its model work and enhance the customer value proposition. Blockchain proposes two ways in which such resources and their use can be made more efficient. The first use case involves a peer-to-peer network over a public blockchain where firms can access resources as and when required.
A firm may opt for automated processes such as documentation, verification, and audit reporting to channelize human resources instead to its core areas. It can also use the public blockchain resources instead of investing in its own IT infrastructure. The second use case is where blockchain can be used to facilitate key resources and processes, like the use of smart contracts in real estate.
Serving Varied Customer Segments
A business firm has to either restrict its target customer segment or else serve various segments differently to enhance its reach. Blockchain integration can open up new vistas and customer segments to a business that were not previously available to it.
Everest targets a user base of 2 billion that has no access to financial services in South Africa, Asia, and South America by using a private and permission Ethereum-based protocol. It provides services such as a payment solution, a multicurrency wallet, and a biometric identification system to facilitate various other financial transactions over the blockchain.
Building Key Partnerships
A strong network of suppliers and partnerships via strategic alliances and joint ventures are quintessential for the growth of any business enterprise. Blockchain integration in this aspect can work both ways. It can help in the removal or transformation of the role of traditional intermediaries such as banks and financial institutions. On the other hand, it can help in the addition of value via technology partnerships with companies that develop application programming interfaces (APIs) and transactional algorithms.
Supply chain and logistics can be further strengthened using peer-to-peer blockchain networks. In South Africa, Centbee developed a merchant payment ecosystem that helps retailers accept bitcoin at the point of sale without any additional hardware installation.
Enabling Cost Savings
The costs incurred by any business impact the revenue of the operations directly. The use of blockchain can help reduce transaction costs and remove the cost of intermediaries. Financial services industries are expected to save annual costs up to $15-$20 billion by 2022 due to a reduction in costs incurred on IT infrastructure and the elimination of manual processes.
Blockchain implementation in financial transfers and other processes can drastically reduce the time funds are held up while the transactions are authorized to minutes (on public blockchains) and even seconds( on private blockchains). The retail giant Walmart recently introduced a blockchain-based tracking solution using Hyperledger powered by IBM.
Strengthening Communication Channels
The efficacy of a business channel lies in its customer reach to deliver a value proposition. The channel may be a competent sales force, store or a website, or the store of the intermediaries involved. Blockchain can help simplify the business processes by removing the requirement of time and personnel to validate the transactions via smart contracts. Also, new channels such as sharing of common code to strengthen the supply chain can be brought in within the organization.
Generating and Improving Revenue Streams
An estimate by ABI research put forth that $0.16 billion in revenue is expected to be generated by blockchains projects by 2023. This revenue would be generated by technology companies providing blockchain-related professional services and via crypto-crowdfunding using initial Coin Offerings(ICOs).
Enhancing Value Proposition
Business firms earn revenue by creating value for their customers. Blockchain can enable access to previously inaccessible products and services via a transparent and decentralized network. Safello, a Swedish Company, uses an open blockchain protocol to ensure transparent exchange of bitcoin against fiat.
The uses of blockchain technology are vast and possibilities immense once it finds a stronghold in traditional and mainstream business sectors and models owing to its versatility. Currently, several pilot projects involving blockchain technology are underway and only a handful have reached the full implementation stage.
Though the odds seem to favor blockchain as suggested by a Deloitte report, “While a majority (74%) of our survey respondents report that their organizations see a compelling business case for the use of blockchain technology, only 34% say their company has initiated deployment in some way.” Given the vast explored and unexplored realms of Blockchain, it is no wonder it can soon prove to be the swiss knife in every business’s pocket.
