Post COVID: Will Blockchain bring the winds of change ?

Since the beginning of the Coronavirus pandemic, banks everywhere have been facing new challenges. Interest margins and income fees are under pressure to change, NPAs are imminent as the corporate sector fights for survival, and the need for trade finance is vanishing. At the same time, banks are expected to prop up systemic stability by decreasing rates, relaxing capital rules, take suitable liquidity measures, and support their customers by deferring loan repayments and waiving charges. There is, however, a bright spot amidst the gloom: Blockchain.

Blockchain can be used to combat the effects of COVID-19 and aid in the recovery process. These innovative use cases can demonstrate the benefits of Blockchain for a broader audience.

Blockchain: the saviour?

 In this impossible situation - characterised primarily by the uncertainty of outcomes - Blockchain technology holds a ray of hope for us. Earlier this month, the World Economic Forum reported that Blockchain could indirectly help to mitigate the pandemic's impact. The banking industry is expected to account for 30 per cent of total Blockchain spending through 2023, if not beyond. The COVID-19 crisis is opening up new opportunities and accelerating adoption of established use cases.

 As work from home becomes a part of our lives, organisations will ramp up investment in digital, automation and AI technologies. The sharp increase in the number of employees accessing enterprise systems and data remotely will heighten concerns of data confidentiality and privacy. It will create a need for robust authentication and access control.

 Blockchain can not only provide such connectivity but also protect data from being stolen or tampered. As an investigative journalist John Sweeney rightly said, "safety is a basic human need." Banks which invested in the technology can now leverage it to secure data and applications on their network.

A very recent survey by Lightico of 1,000 bank customers found that 82 per cent of respondents were worried about stepping into their local branch. Also, 63 per cent were more willing to connect via a digital app or website than they were before the pandemic [3]. With the world eliminating physical touch in the wake of the pandemic, Blockchain can add immense value by simplifying and securing digital payments in place of cash transactions.

These are only some out of many use cases. Following retail and peer-to-peer (P2P) payments, business-to-business (B2B) payments are also ready for migration to distributed ledger technology. In November 2019, one market study found that Blockchain-based B2B payments would cross $ 4.4 trillion by 2024 [4]. The pandemic may have just given it the push it needs.

 Blockchain can also smoothen digital KYC compliance in the programmes launched by governments and international agencies, such as WHO and UNICEF, to provide essential services to the marginalised and unemployed. While several banking operations are already digitised and automated trade finance lags in this area. It relies on manual data exchange and paper documents handed in person. A big reason is that trade finance is a chaotic business, involving several stakeholders and external factors, in addition to the exchange of unstructured information. 

 However, Blockchain offers a way out of this intricacy by enabling digitised trade documents to be exchanged with complete sureness via an immutable, highly secure ledger. Since all the stakeholders are on a shared blockchain platform, there is full transparency between them, creating trust even between strangers.

 Blockchain & Contact Tracing

Another bright spot in these times of despair has been the use of Blockchain in gathering data and controlling the spread of the infection. Blockchain can be used to collect patient data more resourcefully, monitor their movements, and protect their identity at the same time. In Blockchain, there is no central authority and users have control of personal information. They can selectively share data that is important for coronavirus mitigation efforts while protecting their identity and other private information.

 Already there is some promise on the horizon – a team of privacy experts across Europe have proposed a blockchain-based system for COVID-19 contact tracing using Bluetooth. The solution will use decentralised privacy-preserving proximity tracing (DP-PPT), a privacy protocol designed by several research institutions in Europe [5]. On the other hand, Genebank, the decentralised biobank for storage of biodata, is building an app (Agerona) using the Telos blockchain platform. It enables people to acquire anonymous coronavirus tests and send that information to the relevant organisations [6]. 

 Surely, Blockchain, along with AI and Big Data, will pave the way for a financially and socially sustainable economy in the post-COVID world.

References

1. World Economic Forum, Report [https://www.weforum.org/projects/redesigning-trust] 
2. Accelerating digital transformation in banking By Val Srinivas, Angus Ross [ Deloitte]
3. Lighting Survey on Banking [https://www.lightico.com/blog/new-survey-results-coronavirus-pushing-businesses-to-service-remotely-or-wither/]
4. Juniper Research: Blockchain-based Cross-border B2B Transactions to Skyrocket to $4.4 Trillion by 2024 [https://www.businesswire.com/news/home/20191104005739/en/Juniper-Research-Blockchain-based-Cross-border-B2B-Transactions-Skyrocket]
5. DP3T White Paper [https://github.com/DP-3T/documents/blob/master/DP3T%20White%20Paper.pdf] 
6. Telos Blockchain Network, LinkedIn [https://lnkd.in/ekBfxrE]

Contributor : J G