Blockchain technology will cause major disruption in the enterprise stack, sparking a dramatic shift to distributed computing environments with the “value web” becoming a massive peer-to-peer network, according to UBS’s former Group CIO and Group Managing Director, Oliver Bussmann.
Qualified as “the biggest disruptor to industries since the introduction of the Internet,” blockchain will trigger a new wave of disruption in the software business. This will push enterprises to change their approach to IT while opening up new opportunities for technology companies, new entrants and blockchain experts in delivering the right products and services to meet specific needs, according to Bussmann.
“The fact that so many established players see such potential for disruption up and down the stack just confirms me in my belief that broad-based transformation is coming,” he wrote in a recent blog post.
UBS, a member of the world’s largest blockchain consortium of over 40 banks and financial institutions, has been at the forefront of exploring blockchain technology, launching in 2015 a blockchain research lab in London.
In June, the Swiss bank unveiled it has applied for a US patent for an innovation that allows participants in a blockchain-powered market to remain anonymous, according to a report by the Financial News.
The technology is among the numerous prototypes that are being developed at the bank’s London innovation lab.
In January, UBS released a whitepaper that echoed the main theme of this year’s World Economic Forum Annual Meeting in Davos, Switzerland. Titled ‘Extreme automation and connectivity: The global, regional, and investment implications of the Fourth Industrial Revolution,’ the report addresses the technologies that will likely reshape the global economy and the consequences of extreme automation and connectivity on nations, businesses and individuals.
Defined as “the ultimate product of extreme connectivity,” blockchain technology “could benefit firms that use them to automate processes securely, to cut out costly intermediaries, and to protect intellectual property,” the report says.
In the banking industry, blockchain technology could prove “a double edged sword” that has the potential to boost profitability by allowing for desintermediation and help banks save up to US$20 billion annually on infrastructure costs.
“Since blockchain transactions can be processed in as little as 15 seconds, extreme connectivity shortens this process, freeing up capital for trading, investment, and other purposes,” the report says. “While near real-time settlement would be good for bank clients, it could possibly reduce intra-day liquidity for banks since end-of-day settlement gives them access to capital for longer.”
In the insurance business, blockchain technology could allow policies to instantly pay claims based on preset information from trusted third party. Lloyd’s of London has been exploring blockchain technology to reduce friction in the insurance industry. In March, SafeShare partnered with Vrumi to launch the world’s first blockchain insurance solution for the sharing economy. Vrumi connects people seeking affordable workspace to householders. The new insurance product utilizes a blockchain created by Z/Yen Group to confirm counterparty obligations.
Beyond financial services, blockchain can revolutionize supply chain transparency. Physical assets can be registered in a blockchain. This would typically involve virtual tokens representing underlying assets. In this scenario, the ledger can be used to track the movement of goods, providing a highly secure supply chain management system that is resistant to fraud. London-based Everledger uses blockchain technology for diamond certification and related transaction history, providing insurance companies, owners, claimants and law enforcement with a permanent ledger.
