Can Blockchain Pull Service-Oriented Industries Back From the Brink of COVID-Induced Catastrophe?

Few foresaw what the year 2020 would mean for humanity, least of all when even expert epidemiologists were unsure of the timing of Covid-19’s onset.

There is no need to rehash this year; there is enough reporting and discussion around it to fill volumes on social and economic outcomes that may yet reveal themselves. What does need to be done is to look forward and see how to adapt to the “new normal”.

This article will look at how the service industry can start to adapt and perhaps future-proof itself, to become more resilient in the face of the lasting effects of the current situation. Given that the hotel, restaurant, and travel industries have probably been some of the most severely affected industries, we’ll look into options for recovery and how the use of blockchain as a tool can provide some solutions. This proposition is underpinned by a number of use cases in the industry — focusing on the cost savings and safety mechanisms that can be put in place to bolster these people-facing industries. 

That is not to say that the blockchain industry itself has not been impervious to the downturn during the pandemic owing to the withdrawal of investment over increasing financial and economic concerns. But all the players still in the game have been working diligently on new developments while the rest of the world recovers from the downturn. 

The numbers point to blockchain

The IDC’s Worldwide Blockchain Spending Guide forecast a European blockchain spending of $1.4 billion for 2020 and healthy growth of 58% CAGR to 2023. IDC now expects a number of changes in spending in 2020. Blockchain solutions will see a slight slowdown and it is expected that spending will decrease by around 8% going forward.

The McKinsey report, The Recovery will be Digital, on what they are calling the “next normal”, points to digital transformation as a means of overcoming the pandemic and transforming business to make it more agile and reactive to any future events. Many organizations ahead of 2020 are taking steps toward full digital transformation; Covid-19 has sped that up dramatically. Other organizations have had to play catch-up, and quickly! 

The report looks at a number of different digital applications that will hopefully lead to some sort of business recovery. One of those is blockchain. In one specific article, authors Brant Carson, Giulio Romanelli, Patricia Walsh, and Askhat Zhumaev argue that blockchain’s short-term value will predominantly look at reducing cost before it creates transformative business models.

The most recognized way that blockchain allows for cost reduction is in the payments or transactions sector, where it removes the need for a trusted third party in any transaction on the Internet. In many cases, this makes it faster, cheaper, safer, and less error-prone than other technologies. This cost reduction factor will be pivotal in the services industry as it gears up again to have face-to-face interactions and recoup losses caused by the global pandemic.

Ripple, the developer of financial settlement infrastructure, recently reported that blockchain-enabled technology could save 33% from the USD 1.6 trillion in system-wide costs for global cross-border transactions. While the typical money remittance costs might be as high as 20% of the transfer amount, blockchain-based alternatives cost a fraction of that.

How can something so technologically advanced and disparate from a human service environment be capable of creating such a shift?

While other facets of digitalization and the Fourth Industrial Revolution such as AI and robotics carry implications of human substitution — a valid concern for the service industry — the general consensus is that blockchain adoption or integration will likely only happen in tandem with traditional digital systems, rather than to replace them entirely.

Blockchain applications in the service industry will have more to do with processes and data management. This means more transparent and accountable systems that allow for more responsible and secure control of data. 

This can be useful in supply chain management, where the COVID-19 crisis has caused major disruptions across global supply chains.

It will become increasingly important for hotels and restaurants, for example, to reliably verify the origins and route of their supplies, along with other quality control measures like hygiene protocols. Long supply chains are typically opaque and already makes it a challenge to forecast and plan supply accordingly, utilizing time-consuming paperwork, transactions, and confirmations. 

A decentralized system, using blockchain technology, could accelerate these processes, reliably tracking all the data about supply details, storage conditions, delivery time, and quality assurance. For the catering sector, especially an important facet of the service industry, blockchain-based solutions could facilitate planning around the shelf life and health and hygiene protocols of consumables.

The implications for more secure and transparent forms of data control extend into personal privacy and data protection. According to Fortune.com, Contact Tracing for Covid-19 requires the right balance between the collection of data and protecting people’s privacy. This will be something the service industry will have to invest in and blockchain can be used to both gather and collate client data more efficiently, allowing this data to be shared with the relevant bodies without compromising their clients’ privacy completely. 

The Recovery will Be Digital report says that in order for blockchain to be utilized commercially, it will need to be within a private, permissioned environment. At this time that level of stability is required for scalability and recovery and a public blockchain would inhibit growth instead of allowing large and small businesses to leverage the commercial value from blockchain implementations.

Blockchain-as-a-service (BaaS) offerings have lowered the costs of experimentation making it easier to use blockchain commercially. 

Integrating sophisticated technology for a company lacking technical resources presents one entry barrier to adoption. BaaS or Blockchain-as-a-Service companies allow customers to integrate blockchain technology into their businesses easily, without disruption to their daily processes or the requirement to onboard new technical expertise. 

One such company that looks specifically at identity management for organizations is AIKON. AIKON provides commercial entities with a unified interface for managing access control, authentication, and financial settlement. These entities can connect off-chain identities (such as Facebook or Google), to multiple public blockchains so that traditional businesses can seamlessly move their users onto the blockchain. Companies like AIKON will bring blockchain forward to more mainstream use. 

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