Blockchain — best known as the backbone of the cryptocurrency market — now is making inroads in the business world.
Adoption is not yet widespread, with just 1 percent of companies having already deployed the technology, but nearly 1 in 10 are in some phase of development with it. About 8 percent of CIOs are in short-term planning or active experimentation with blockchain, according to a 2018 Gartner survey.
State Farm Insurance has dozens of ideas in the hopper for deploying blockchain technology to improve efficiency, benefiting the business and its customers, according to Cara Shoup, director of RED Labs, the company’s innovation arm.
Insurers Adopt Blockchain Aggresively
The one that is furthest along, she says, is “net segregation” in auto claims. Insurers often seek restitution from one another when one company’s insured driver is deemed at fault in an accident after the other has paid.
Through blockchain’s open ledger, transactions are verifiably and permanently recorded. State Farm is testing the use of blockchain with another insurer to automate the net restitution process.
“Currently, this is a very manual process,” Shoup says. “You’re sending paper checks back and forth.”
She says blockchain could improve efficiencies at State Farm, allowing -customers to get money from their deductibles faster.
Manish Shah, executive vice -president and global product head at Majesco, a provider of consulting and technology services to insurers, says companies are starting to see blockchain’s potential.
“Whether it’s managing large amounts of data, the rising number of claims and transactions processed through personal devices, or creating new payment and distribution models, insurers are recognizing that blockchain can support the wide range of digital innovation that’s reshaping the insurance industry,” Shah says.
Businesses Pay Taxes in Cryptocurrency
Blockchain may also soon play a larger role in how businesses pay their taxes, according to Ari Lewis, a cryptocurrency adviser who had a role in helping create OhioCrypto.com, which enables businesses and citizens to pay their taxes in bitcoin. Two businesses have already done so, the state says.
“Cryptocurrency and blockchain are working from a niche technology to the mainstream,” says Lewis. “This is a watershed moment in the history of cryptocurrency and blockchain.”
Not everyone is as bullish, however. David Furlonger, a Gartner vice president, argues the technology has been “massively hyped.”
“Blockchain technology requires understanding of, at a fundamental level, aspects of security, law, value exchange, decentralized governance, process and commercial architectures,” Furlonger says. “It therefore implies that traditional lines of business and organization silos can no longer operate under their historical structures.”