Tag: Data management

Categories
Crypto Daily Topic

What does Blockchain technology have in store for the Insurance Industry 

The insurance industry has had a tough time trying to adapt to maturing markets, economic turbulence, and dynamic customer preferences. This has forced insurers to seek a “winning formula” that will ensure profitability and sustainable long-term growth in an industry overwhelmed by constant disruptions. Part of the ‘winning formula’ for most insurance firms is integrating newer technologies and business-model innovations into their legacy environments. 

The insurance industry has had a tough time trying to adapt to maturing markets, economic turbulence, and dynamic customer preferences. This has forced insurers to seek a “winning formula” that will ensure profitability and sustainable long-term growth in an industry overwhelmed by constant disruptions. Part of the ‘winning formula’ for most insurance firms is integrating newer technologies and business-model innovations into their legacy environments. 

The insurance industry has had a tough time trying to adapt to maturing markets, economic turbulence, and dynamic customer preferences. This has forced insurers to seek a “winning formula” that will ensure profitability and sustainable long-term growth in an industry overwhelmed by constant disruptions. Part of the ‘winning formula’ for most insurance firms is integrating newer technologies and business-model innovations into their legacy environments. 

Blockchain technology can potentially disrupt the insurance industry by improving operational efficiency and mitigating the obstacles facing the insurance sector. As such, insurers are becoming increasingly open to embracing this disruptive technology. Here is how Blockchain is being used in the insurance industry.

1. Fraud detection and claim processing

Insurance firms have for long grappled with fraudulent claims, which accounts for $80 billion in losses per year. Even after investing in anti-fraud technologies, insurers have not been successful in curbing fraud, which eventually robs them off. What’s worse is that consumers are equally affected by fraudulent claims as they are forced to pay more for insurance premiums. 

Most of the fraud cases stem from data fragmentation in the insurance industry. It’s, therefore, possible for fraudulent claims to slip through traditional anti-fraud technologies leading to losses. Besides, claims processing is mainly paper-dependent, which creates room for criminals to modify information and hence make fraudulent claims. 

Blockchain helps insurers solve the fraud problem by providing a transparent and decentralized platform on which data is recorded. In turn, this eliminates the paperwork required in claim processing, meaning that the data can’t be modified. Most importantly, the data can be shared among the involved parties, making it easy to validate a claim.

For example, in travel insurance, an airline company can share flight cancellation data with an insurance firm to ascertain that indeed the flight has been canceled. The insurers will then compensate the consumer who is insured against flight cancellation. Moreover, blockchain is tamper-proof, meaning fraudsters can’t modify the recorded data. 

2. Data management

In the insurance industry, data is essential in the formulation of more customer-based insurance policies rather than just mere products. For example, the automotive insurance sector can draw valuable insights from such data as driving time, behavioral statistics, acceleration, distance covered, and breaking patterns. With these insights, an insurance firm can develop accurate actuarial models and user-based insurance policies. 

For most insurance firms, collecting this type of data has been easy, especially with the advent of the Internet of Things (IoT) devices. However, the problem comes with managing the collected data and storing it in an accessible fashion. With the existing infrastructure, insurance firms store their data in centralized data centers, making them prone to breaches. Even worse, these databases work in isolation, which jeopardizes the collaboration of different departments within a firm. 

Blockchain can be used to manage the large volumes of data collected by insurance firms. Instead of expensive data centers, the technology offers a decentralized and secure network to store and process data. In turn, this promotes collaboration within a firm and even with other entities such as police departments, which also results in efficient claim processing. 

3. Streamlining reinsurance

Reinsurance is a cover for insurers. Simply put, it is when an insurance firm buys an insurance policy from another firm to protect itself against certain risks. For example, a firm can take an insurance cover from another firm to protect itself against the increased cost of claim settlements resulting from mass health epidemics or natural disasters. 

Inefficiencies plague the current model used in reinsurance. First off, the operations are manually processed and determined by a one-off contract. As such, a single contract is explicitly written to cover a  specific event. This results in a single policy being divided between numerous insurers creating data silos that take lots of time to process. Also, an insurer doesn’t just negotiate with one reinsurer but with several of them, which further complicates the whole process. Each of these involved parties uses different data infrastructure resulting in slow data exchange, making the process costly and time-consuming. 

Price Waterhouse Coopers estimates that if the reinsurance industry improves operational efficiency, then they can save up to $10 billion. The primary way to achieve this is by using a blockchain consortium network, which will allow the insurers and reinsurers to communicate and efficiently share data about policies. Besides, considering the fragmentation of a single policy, unified record-keeping in reinsurance is particularly essential. 

4. On-demand insurance

As the name suggests, This is a flexible insurance model where policyholders easily turn their insurance policies on and off. Currently, the on-demand insurance market requires humans to pass a policy from quote, underwriting, to eventually issuance, which costs significant amounts of time and money while also exposing a policy buyer to risk. 

On-demand insurance providers can trade blockchain technology for structured record-keeping from the policy’s inception to disposal. This would eliminate the clerical errors experienced in the current manual model. Built-in Smart contracts can also be deployed to initiate and terminate policies based on predetermined criteria automatically. This would mean fast policy formulation as well as quicker claim processing. 

5. Micro-insurance

Micro-insurance is a policy that covers specific risks for regular premiums. The policy is designed for low-income families and individuals who, in most cases, are unbanked. As such, insurers rely on third-parties such as banks to link them with the policy clientele base.

To make reasonable profits from micro-insurance policies, an insurer needs high volumes of policies. However, the increased distribution cost may sometimes beat the low-profit margin despite a ready market for the policy. 

Blockchain can be used to link insurers directly to the market, thereby eliminating the third-parties, thus reducing the cost of distribution. Digital tokens can be used to make insurance payments, making the policy even more affordable due to the reduced cost of transactions that come with digital assets. 

Achieving widespread adoption of blockchain technology in the insurance industry 

Like any other technology, it will take time before the insurance industry fully integrates blockchain into its systems. But, it doesn’t mean the industry can’t achieve widespread adoption of the technology. For that to happen, the following criteria must be met:

Internal proof of concept

The first step towards adoption is for insurance firms to start in-house projects experimenting with blockchain. This will help them first solve their unique problems affecting efficiency in the firm before trying to solve the challenges facing the wider insurance industry. At the same time, experimenting with blockchain allows firms to learn how blockchain works, which then opens their understanding of how this technology can be applied in the industry. 

Design customer-centric solutions

Blockchain solutions in the insurance industry should be designed with the needs of the customers in mind. Designing solutions-focused entirely on helping a firm may lock out customers since their needs are not met, or rather they are sidelined. 

Conclusion 

The need for blockchain is becoming more apparent in industries seeking to improve operational efficiencies for sustainable long-term growth. With this in mind, the insurance industry needs to embrace blockchain technology to solve the industry’s challenges and, consequently, improve customers’ experience. 

Categories
Crypto Daily Topic

Blockchain in the Aviation industry: is it Just a Fad? 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

The growth of any industry is pegged on its ability to keep up with evolving technology. For the service industry, it becomes even more important to adopt emerging technologies to improve customer experience. Blockchain is one such emerging technology that is set to catalyze the growth of numerous industries in the wake of the fourth industrial revolution. 

But for the better part of its existence, Blockchain’s potential to disrupt industries only sounds good on paper, with little to no implementation in the real world. As such, it’s impending penetration into the aerospace industry may seem just like a fad with no hopes of implementation. Still, the industry features highly fragmented distribution channels, minimal business model innovations, not to mention its inability to effectively use data and analytics to improve key operations. However, all these could change if airline companies are willing to experiment with Blockchain. As a service industry, air transport stakeholders need to consider using Blockchain to improve customer experience. 

So yes, Blockchain in the aviation industry is not just a hyped craze. In fact, it could mean the difference between the leading airline company, and a less competitive one, is the one that is first to adopt the technology. 

What can Blockchain do For Airlines? 

The intrinsic characteristics of the aviation industry align impressively well with the capabilities of blockchain technology. As such, it’s poised to provide a fertile ground for innovations within the industry in the following ways: 

Efficient data management

The airline and the broader travel industry are characterized by data sharing among multiple actors, from flight booking to immigration, to hotel check-ins and everything in between – all, which creates a complex web of data reconciliation that runs behind the scenes of every touchpoint of a traveler’s trip. 

For an airline company, managing flight data and any other information entail the use of electronic aircraft maintenance records (EAMR). These record systems often operate in isolation, creating data silos that inhibit efficient data sharing. 

Case in point; it’s common for the passenger service department of an airline company to use a separate database from that of the crew management. This compromise, not only operational integrity but also puts revenue generation at stake in case something goes wrong. Since almost every department maintains its own database, it becomes time-consuming to extract data, say, in the event of an audit or investigation of an aircraft accident. Further, there may be discrepancies between data stored in different silos leading to flight delays or other unplanned expenses. 

With too many systems in play, airline companies could benefit from a decentralized database that can facilitate seamless data exchange among various departments of the same company. This way, flight operations will run smoothly with fewer resources spent on maintaining databases. Data reconciliation will also get easier with Blockchain as any update or changes of the recorded information are updated in real-time across all departments. 

Identity management 

In the air transport context, identity theft can be used to commit fraudulent activities, including terrorism, consequently putting other passengers at risk. Although the use of biometric systems has subsidized cases of identity theft, centralized identity management systems aren’t entirely safe from manipulation. Now enter Blockchain. Once an identity is recorded and validated on the network, it is secured using hash cryptographic function, rendering it immutable. The passengers will only be required to carry a unique code — similar to a private key — for verifying themselves. To further suppress the chances of identity theft, the airline authorities can liaise with the state security officials who will be added to the blockchain network to scrutinize the details of every passenger. 

Baggage tracking 

Most airlines outsource their cargo logistics to trusted handlers. Even for airline companies that have in-house cargo logistics, they are riddled with a mix of manual and automated processes creating weak links on the cargo management chain. The outsourced parties suffer from non-standardized processes as well. 

Similar to the identity management use case, every baggage will have a unique code that’s encrypted in the blockchain network. Each phase the luggage goes through, from origin to recipient, its code can be scanned and the location updated on the network in real-time. But, it’s easy to achieve such functionality using traditional technology, why to bother using blockchain technology, you ask. 

Well, if a baggage tracking system was to run on conventional technology, it would create network congestion as it struggles to synchronize data of countless passengers’ baggage and cargo in real-time. What gives Blockchain baggage tracking systems an edge is the fact that it’s decentralized. 

As such, it’s less reliant on the network bandwidth, meaning airlines won’t experience network congestion as the system synchronizes the baggage code. Further, the digital ledger tracks luggage at critical checkpoints throughout the trip; from the initial handover to when, the baggage is loaded into the plane until it’s finally delivered to the passenger. This saves airlines money spent on securing baggage and settling cases of lost goods. 

Repair and maintenance of aircrafts 

The repair and maintenance of different parts of an aircraft need to be logged to serve as a reference to the airworthiness of an aircraft. Usually, records of this maintenance are recorded in bulky manual binders before being loaded in separate databases.

Blockchain can be used to electronically store these records minimizing chances of clerical errors that would otherwise be fatal. The electronic trail will be accessible to the maintenance technicians and aviators, both of who would work harmoniously to ascertain if the aircraft is safe enough for flight.

The same functionality could be replicated on aircraft fueling processes. Using a blockchain application, real-time fuel data would be shared among concerned stakeholders; in this case, the fueling company, the airline, and the bank. In the event fuel levels drop to a certain predetermined level, the fueling company gets a notification and responds accordingly. Once refueled to an agreed limit, automatic payment from the bank to the fuel supplier is initiated via smart contracts. The goal here is to speed up the refueling process and eliminate inefficiencies experienced when handling the process manually. 

Conclusion 

Blockchain application in the aviation industry goes beyond data management. The technology can also be used to tokenize e-tickets using smart contracts, thereby eliminating paper-based tickets and electronic passes. The tokenized tickets will have their own business logic and terms such as value and time of usage, allowing passengers to sell and buy tickets from anywhere in the world. Ultimately, the use of blockchain technology in aviation will inspire innovations of sustainable business models aimed at reducing costs and improving operations. 

Categories
Crypto Daily Topic

Blockchain and Big Data: A Match Made in Heaven? 

The rise of the technological revolution has given birth to data-driven businesses. Organizations now collect large volumes of consumers’ data that is analyzed to make strategic business decisions that help drive profitability. The collection of massive consumers’ datasets, which is commonly known as Big Data, has become an established industry on its own with its revenue projected to grow to $103 billion by the year 2027. 

Big Data and Blockchain - Forex Academy (Photo by Science in HD on Unsplash)

The rise of the technological revolution has given birth to data-driven businesses. Organizations now collect large volumes of consumers’ data that is analyzed to make strategic business decisions that help drive profitability. The collection of massive consumers’ datasets, which is commonly known as Big Data, has become an established industry on its own with its revenue projected to grow to $103 billion by the year 2027. 

The rise of the technological revolution has given birth to data-driven businesses. Organizations now collect large volumes of consumers’ data that is analyzed to make strategic business decisions that help drive profitability. The collection of massive consumers’ datasets, which is commonly known as Big Data, has become an established industry on its own with its revenue projected to grow to $103 billion by the year 2027. 

As Big Data continues to become more prevalent in modern-day businesses, it presents a slew of analytical problems to businesses looking to derive valuable insights from the data. Additionally, with the advent of the web of connected devices, consumers are also at the risk of privacy violations due to the increased probability of security breaches. 

But blockchain, a relatively new technology focused on data integrity and management, has the potential to transform the Big Data industry. And although the two technologies, blockchain and Big Data, may seem mutually exclusive on the surface, they complement each other to create powerful solutions for tech-driven enterprises. 

Where can Blockchain Help Big Data

Some of the biggest challenges facing the Big Data industry stem from poor data management. This is despite the numerous efforts by data scientists to come up with different data management systems. Even with the dynamic technological advancements, it’s becoming quite clear that the most modern tech-infrastructure can’t keep up the growing volume of data. 

As a result, poor data management breeds such other problems as data insecurity as well as inaccurate and incomplete records, also known as dirty data. Analysts and organizations have, therefore, been forced to spend a huge deal of their time and resources on data management that, in an ideal situation, would be spent on other core areas of the organization.

But with the advent of blockchain technology, data management is about to get a lot easier for both the data collectors and its consumers.  

By leveraging the fundamental properties of this novel technology, traditional data-processing infrastructure could be upgraded to manage data adequately. Below are some of the potentialities that the integration of Big Data and blockchain offers:

I) Enhance Data Security

The Big data industry struggles with the lack of adequate security to keep from malicious hackers and their advanced tools at bay. The current data management infrastructures cannot, therefore, be relied upon to keep consumers’ data secure. 

As a distributed ledger system, blockchain technology can be integrated into these data management infrastructures to improve their security. The fact that it uses cryptographic principles to record data in the network makes it almost impossible to breach.

In addition to the high-security standards, blockchain solutions for big data eliminate the need for a central infrastructure where data is stored. Instead, data is stored in a distributed network, making it impossible for a single party to generate enough computational power to alter the data in any way. 

II) Ensuring Data Integrity

Besides, drawing insights from the data, data scientists spend a great deal of their time verifying the data in their care and ensuring it is accurate and consistent.

Blockchain can relieve analysts of this tedious task by vetting this data before it’s recorded in the extensive data chain network. It, therefore, solves the persistent cases of inaccurate, repeated, and incomplete data and makes it easier to draw credible insights from the data. While verifying each dataset, blockchain technology also enhances transparency, given that any data recorded within the network can be traced.  

III) Allow Individuals to Monetize their Data

In today’s information age, data is the single most valuable commodity traded by giant tech companies as well as small enterprises. However, the owners of the data rarely benefit from this trade. They are reduced to mere data sources, while enterprises pocket all the profit from selling their data.  

This practice is about to change with the introduction of blockchain to Big Data. The technology is set to democratize data ownership, allowing consumers to regain absolute control of their data. Data monetization can be supported through a token-based economy or discount on products in exchange for personal data. 

Eventually, blockchain will create marketplaces where individuals can trade data directly with businesses. Unlike the current data market, blockchain marketplaces will be more transparent, allowing individuals to see how their data is being used even after the transaction has taken place. 

IV) Manage Data Sharing

As a decentralized ledger system, blockchain allows parties within a network to share data without the security risk factor. As such, it’ll be easier for, say, banks and hospitals to share an individual’s data effectively, improving service delivery. Additionally, the coordinated data sharing eliminates the cumbersome Know Your Customer (KYC) processes, saving institutions money and time. 

Even within an organization, data sharing will be seamless with the use of blockchain solutions that eliminate data silos. As a result, departments within an organization will collaborate efficiently to improve productivity. 

V) Real-Time Data Analysis

Blockchain in payment systems is used to facilitate real-time transactions. Today, there are several fintech innovations that use blockchain to process fast and real-time settlements of huge sums, irrespective of geographical barriers.

In the same way, blockchain-enabled systems can be used by organizations that require real-time analysis of large scale data to improve their services. For instance, if banks were to use these systems, it would enable them to observe changes in data in real-time and make quick decisions, such as block fraudulent transaction attempts or track irregular activities. 

VI) Predictive Analysis

Data stored on a blockchain network can be analyzed to give valuable insights, much like any other form of data. Considering the accuracy and security of blockchain data, the analyses derived from this type of data are more accurate than those from traditional data management systems. 

Additionally, owing to the distributed nature of blockchain and the huge computational power it offers, data analysts, even those in small organizations, can engage in extensive data analysis tasks. By leveraging the accuracy of the data stored therein, the computational power of the blockchain, and its resourcefulness, data analysts can predict and forecast different aspects of the business with utmost accuracy. 

Conclusion

Blockchain and Big Data technologies are set to radically transform the way businesses process and manage large volumes of data. As such, the integration of the two technologies to form a single solution will not only help businesses step up their data infrastructures, but also solve some of the inherent problems that come with managing large databases.

You must, however, appreciate that blockchain solutions in the Big Data industry may not be realized anytime soon due to the growing concern that blockchain application in Big Data is overly expensive. Most tech companies believe it is cheaper to store data on the traditional infrastructures than a blockchain network. This is because blocks can only store and process a limited amount of data, which is smaller compared to the large volumes of data collected per second by current Big Data systems. But blockchain is an ever-evolving technology, and hopefully, it will mature fast enough to address these concerns, allowing for its full implementation in Big Data management.