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The growing interest in the blockchain technology does not appear to be slowing down despite the extended turbulence in the cryptocurrency markets. Leading enterprises in every industry are today exploring whether and how blockchain can help them stay ahead of the competition while becoming more efficient. The governments which are the largest enterprises in any country are not far behind. Governments in many developed and emerging markets are taking a lead in exploring how blockchain can disrupt education, social, administration, and healthcare sectors.

Healthcare is one of the sectors where governments and private enterprises co-exist in many countries. In this article, we explore how various governments are embracing the blockchain technology to address industry issues and drive efficiencies.

In healthcare, critical information is often scattered across multiple systems, and it may be difficult to retrieve when needed the most. The current scenario of healthcare sector has often been referred to as inadequate to handle information exchange in most countries and leaves immense room for improvement. The healthcare industry is drowning in data—clinical trials, patient medical records, complex billing, medical research and more. Its evident that it is probably the right time to take a fresh approach to data sharing in healthcare and blockchain can prove to be the best among all the other approaches as it offers a lot of needed benefits in the healthcare industry.

Counterfeiting of drugs is also a menace that hurts the healthcare system, as entities with malicious intent are able to use the loopholes in the drug supply chain. As a result, these entities earn disproportionate profits, while barring the patients of proper medication. The loopholes are not limited to drug supply chains, but exist in the process of verifying credentials of medical practitioners. In the absence of a strong mechanism to verify records of medical practitioners, some fraudsters are able to enter the system without proper qualification and competence putting the health and lives of patients at risk.

Blockchain technology can bring in changes that can rid the healthcare systems of many of these issues, and several government agencies in partnership with private players and technology providers are working in this direction. Apart from addressing such long-standing issues for the sector, the technology can also enable some processes become much more efficient, by eliminating several layers and manual documentation and making the process seamless. Some of these processes – organ donation and transplant, and R&D for preventive medicines. Using blockchain in these systems can drive significant efficiencies into these processes, as some government agencies have already realised. 

Here are five reasons why governments are bullish on blockchain for healthcare sector

Digitized storage and sharing of patient data: Benefits of digitizing patient data have been acknowledged even before the advent of blockchain technology, especially in the developed west. However, the permissioned, truthful, real-time and immutable properties of blockchain ledgers make them ideal for string and sharing of patient data such as health and demographic profile, medical history, and diagnosis reports.

• The Chinese government keeps a track of the medical history of patients to keep the health centers and district hospitals interconnected so that authorized doctors could easily view the patient’s medical history at any required time.
• The Estonia government keep a record of the medical history of more than 1 million people and whoever touches the records must give a service compliance as to how are they treating the patient data.
• The USA government also keeps secured digitized records of patients to be used as and when required in order to eliminate the need for intermediaries, which otherwise can take a lot of time, especially in case of emergencies.

Eliminating counterfeit drugs from the supply chain: By tracking the supply chain, the quality of drugs can be checked and verified at every step. The patient is assured that she is getting a genuine medicine, and pharmaceutical companies can be assured that counterfeiters stay away. Also, other information could be recorded as some drugs require special temperature conditions.

• The Mongolian government is trying to eliminate the distribution of counterfeit drugs from their system by conducting feasibility reports, helping the government monitor and inspect pharmacies, and pharmaceutical supply chains, including warehouses and retailers.

Fraud protection: Degrees, transcripts, and verification forms on blockchain platform allows maintaining private profiles for the authenticity of caregivers. Also, personalized data records allow the patients to control when and who can view and control their genetic records thus reducing the chances of fraud.

• The USA government is using blockchain to provide verified medical certification credentials to the students, who can store official records such as degrees, transcripts, and verification forms and allows to maintain their private profiles.
• The Indian government is using blockchain to provide more personalized patients’ genetic data records to the patients and hence provide more transparency and reduces the chances of fraud.

Organ donation and transplant have become easier: Using blockchain technology and having a hands-on database, all the paperwork that was required for organ donation is now not needed. Chances of errors in donation and transplant are significantly reduced. Also, the time consumed is very less.

• The Indian government is using blockchain for organ donation and transplant by tracking the supply chain to allow automation, distribution, and full transparency.

Advancement in Research and Development: The governments are also using blockchain to track a patient’s medical record allowing clinicians to predict, diagnose and prevent serious illnesses.

• UK government has used this and has developed a kidney monitoring app that aims to improve care, directing clinicians to patients who are at risk of or have a serious condition of acute kidney injury (AKI).

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Trade finance is not only an useful instrument for improving liquidity and cash flows of traders and reducing the risk in global trade finance. It is an essential product for any bank to attract corporate customers. A similar product is Credit Insurance, where an insurer covers the risk for an exporter if he is not paid for any reason. As global trade sees emerging headwinds in the form of protectionist measures and high-trade tariffs deployed by major countries, trade finance and credit insurance products have become important for traders, as banks and insurers strive to make these products more efficient.

Blockchain technology seems to answer this call for efficiency, as it promises to increase collaboration, automation, and oversight in trade finance transactions. Trade finance by banks and credit insurance by insurers can be vulnerable to business risks and uncertainties stemming from several factors. These include process inefficiencies, variance, and fluidity in trade regulations and requirements across geographies. These obstacles can increase costs and risks leading to unfavorable financing conditions.

It’s no surprise, then, that the application of distributed ledger technology (blockchain) in trade finance has become an important focal point for financial institutions around the world. This application has the capacity to make the overall trade flow – currently hampered by outdated processes, faster and more cost-effective. This is a great step forward in the process of digitalizing and standardizing the paper-driven trade finance process from start to finish. This step can provide several benefits to both the banks and insurance companies.

• Faster issuance of LC (letter of credit): Blockchain usage reduces issuance time from several days to just a few hours
• Faster claim settlement: Faster claim settlement due to easy availability and audit-ability of trade data.
• Transparency: It is transparent and shared ledger which can be viewed by all parties while providing selective visibility to participants based on their credentials.
• Error reduction: It will reduce frauds as all parties can view the distributed ledger and eliminate settlement delays as all documents are digitized and stored on an unchangeable ledger.
• Traceability and immutability: It will enable the stakeholders to track payments in real time providing delivery assurance and no single participant can modify or delete information without consensus from other network participants.
• Cost saving and better customer experience: It will make the process faster, more cost-effective and gives companies access to capital.
• Increased sales from higher SME participation: A simpler and standardized blockchain platform will also allow the banks and insurance companies to tap deeper into the SME trade financing, as the cost and time of financing will come down. This would help them unlock a new market of SMEs who are currently unable to avail trade financing due to higher cost and complexity of the process.

The blockchain technology has huge potential to reinvent global trade and improve the customer experience for banks and insurance companies. We are not surprised that several banks and insurance companies from across the world are currently testing the blockchain technology within their ecosystems. Some of these projects have also been partially commercialized, and corporate clients have queued-up to test the new platforms. Full-scale commercialization is, however, subject to the participation of all stakeholders including the regulators. Scalability, consensus, systems integration, and interoperability of multiple blockchains remain some of the challenges that need to be addressed.

The insurance industry is largely process-driven and many of these processes require a significant human intervention. These processes include selling, evaluating, analyzing, processing, and activating, policies; customer service and management; receiving, validating, processing or rejecting of claims; and finally settling claim related disputes. Most of these processes are still mostly manual and require a lot of data to be captured, analyzed and processed based on set rules. The data, of course, needs to be updated regularly, should be kept safe, and should be processed accurately, for these processes to work smoothly. This significant dependence on the human workforce, and ever-increasing size and types of data, has brought in several inefficiencies into the system.  These inefficiencies are a result of errors, duplication, misinformation, incorrect evaluation, and even corruption.

With this context, we are not surprised that several insurance companies are experimenting with the blockchain technology. With properties such as security, transparency, immutability, audit-ability, and smart contracts, this technology can potentially address a lot of problems the industry is facing.

The adoption of blockchain in the insurance industry took off in the second half of 2017 when a couple of projects were commercialized. Several industry stakeholders are participating in the blockchain journey now, and have initiated enterprise blockchain projects for a variety of applications such as KYC and information sharing, healthcare data sharing, claim settlements, catastrophe bond swaps, motor insurance, and flight delay insurance, among others.

Some of the major benefits that the stakeholders can derive from the implementation of blockchain technology are:

• Information sharing will be easier and faster among the insurers, which will save time and cost.
• Proving the validity of insurance will be easier for the customers.
• Control fake and duplicate documentation.
• Reissuance of insurance will be easier as verifications will take very little time.
• Claim settlements will be faster and easier. The duration can be reduced to hours instead of days or weeks.
• Subrogation can be streamlined and will help the insurance organizations get their funds faster.
• Paperwork can be reduced throughout the industry, driving efficiency and positive environmental impact.

Several organizations have come together and formed various consortia to cut costs and develop the solutions faster. It is also encouraging to see that besides the insurance companies some insurance regulators are also proactively participating in these consortia. This should allow many solutions that are commercialized, to be widely approved, well regulated and accepted.

We also see a strong potential of integrating some elements of artificial intelligence, especially RPA into the blockchain driven applications, as some of the organizations are already experimenting on these lines. After having been disrupted somewhat, by the emergence of e-insurers and insurance aggregators, the traditional insurance companies look all set to embrace transformative emerging technologies, and by the look of things, blockchain seems to be one strong weapon in their arsenal.

If we look at the geographic split of enterprise blockchain adoption, Asia comfortably leads Europe and Americas. Japan and India are contributing to higher adoption in Asia. However, the USA remains the single largest adopter of the technology as far as individual countries are concerned.

Annual General Meetings are supposed to be an ornament of transparency that is associated with publicly listed companies. Important decisions that influence business and sustainability performance of the company are put to vote in front of all shareholders, irrespective of the number of shares held by them. In most companies, each share accounts for one vote and therefore, the participation of each shareholder can be critical.

Proxy voting has emerged as an important tool for corporations to invite participation of all shareholders, and several traditional and digital channels are being used by companies to facilitate proxy voting. Despite being an important tool for bringing transparency, active ownership and making customer-centric decisions, today’s scenario of the proxy voting process has significant headroom for improvement.

According to Broadridge, 86% of the institutional investors, and 27% of retail investors voted in 1040 annual meetings held between July 1 and December 31, 2017. The poor participation of retail investors in the voting process is a cause for concern because it gives disproportionate power to active investors, which could adversely influence corporate decisions. This becomes an even bigger problem, in small and mid-cap companies where institutional shareholding is low, and low turn-out of retail investors can give disproportionate voting power to promoters of the companies. The current proxy process is also expensive and error-prone as it involves significant manual intervention.

Companies are rapidly moving to digitized proxy-voting and virtual shareholder meetings. However, the processes adopted by each company varies. If the stock-exchange creates a central blockchain based registry of all shareholders of public companies with a provision of proxy voting, it can yield significant benefits in terms of transparency, efficiency, and uniformity.

The major stakeholders involved in the proxy voting process are corporations, institutional investors, retail investors, regulators, stock exchanges, proxy voting/ advisory firms. All these stakeholders stand to gain if scalable blockchain platforms can be used for proxy voting. Some of the key benefits that these stakeholders can derive from the adoption of blockchain in proxy voting are as follows:

• Increase in the number of voting shareholders at the expense of minority shareholders who usually do not participate in the voting process because of its high expense.
• Eliminate the process of printing and distributing proxies as all the details regarding the meeting and the agenda can be easily made available to investors online or through their phone.
• Eliminate the errors arising from human intervention as the process can be completely automated.
• Provide real-time access to voting results to shareholders and enable exchanges to trace full voting history in real time.
• Improve the corporate governance of companies by increasing the participation of retail investors

It is heartening to see that several industry stakeholders have initiated blockchain projects to make the proxy voting process more transparent and efficient. Learnings from these projects can pave the way for commercialization and larger adoption of this technology that can truly democratize the way retail investors own public companies.

Here are some examples of how industry is embracing blockchain for proxy voting:

• Santander, Broadridge, J.P. Morgan in collaboration with Northern Trust have successfully completed their pilot in March 2018 to use blockchain in proxy voting. The blockchain pilot was utilized to produce a shadow digital register of the proxy voting taking place. It helped institutional investors to get an insight on how their votes could be counted and confirmed much more quickly, instead of having to wait two weeks in a process that includes manual activity by different intermediaries.
• Tallinn Stock Exchange, The Estonia Central Securities Depository and Nasdaq have successfully completed a pilot test for blockchain proxy-voting in January 2017. The investors were able to vote online during investor meetings or transfer their voting rights to a proxy. The project streamlined the process of E-Voting which, otherwise, is highly manual and time-consuming.
• Abu Dhabi Securities Exchange (ADX) has launched a Blockchain-enabled e-Voting platform and has commercialized it’s use in May 2017. It enables shareholders of listed companies on the exchange to vote during annual general meetings. The aim was to facilitate a simpler and more effective voting process, so that each transaction on the ADX-developed blockchain platform will be counted as a vote. Also, it increased the number of voting shareholders.
• The National Settlement Depository (NSD), Russia, in partnership with DSX technologies successfully tested an e-proxy voting system running on blockchain in May 2016. On the platform, Bondholder passed a vote to a nominal bondholder, who submitted a vote to the blockchain. Then, the counting commission counted the votes and submitted the results to the blockchain. The Bondholder was able to verify whether the votes have been counted correctly. This decreased operational risk and allowed votes to be anonymously verified and counted.
• TMX Group in collaboration with Accenture announced a prototype E-voting platform for shareholders using blockchain in April 2017. It aimed to eliminate the need for shareholders to be physically present during the voting process and use a digital signature from anywhere to verify their vote. This was done in order to improve efficiency and accuracy of the voting process during annual shareholder meetings, while enhancing security through cryptography.

Bond issuance and trading platforms built on blockchain can benefit several stakeholders in the bond market. The list of stakeholders includes enterprises, SMEs, investors, stock exchanges, regulators, treasuries, banks, insurance companies among others.

Some of the benefits of using blockchain based bond issuance platforms are:

• The process of bond issuance can be standardized and made more transparent
• Reduction in settlement time and associated risks
• The amount of paperwork and corresponding errors and corruption can be reduced
• More (smaller) issuers can access the bond markets due to reduced cost and time
• Better efficiency in the secondary trading market
• Better regulatory compliance and supervision
• Rating of bonds becomes more efficient and accurate

Several bond issuance and trading platforms have been tested successfully and are under development. The steady growth in the number of new projects initiated indicates that the excitement around these platforms is increasing. However, before these platforms become commercialized, they need to overcome a few challenges and need to be tested thoroughly which seems to be delaying the launch of these platforms. Also, bond markets are highly regulated and any commercial launch could require regulatory tweaking which is not the easiest and the fastest task. Please contact our research team to learn more about how and in what areas can blockchain disrupt the bond market ecosystem.

Here are some examples where market participants are using the blockchain to achieve above stated benefits:

• Securities division of BNP Paribas is working on a blockchain project that would enable retail investors to lend money to businesses using a blockchain platform. This platform will maintain and record details of mini-bonds issued, and will allow all pertinent stakeholders to transparently access this information. This will be immensely beneficial to small businesses, while potentially helping standardize bond management.
• In early 2017, the Commonwealth Bank of Australia issued a crypto-bond last year, using its capital markets blockchain platform. The bond was a working prototype, was not tradable and did not carry any debt obligation. This bond was created in digital form using smart contracts and could automatically pay coupons to the current holder when due. If commercialized, such a platform will eliminate the need of intermediaries, reduce costs, time and paperwork which further enhance transparency, and eliminates errors.
• SBI Securities (Japan) has collaborated with IBM to develop a blockchain based bond trading platform. This platform aims to streamline the entire cycle from registering a bond to its reimbursement, by automating operations with shared databases. It reduces the amount of paperwork and human effort involved in the process, while reducing the chances of errors. It also improves efficiency by making the process faster.
• Daimler AG and Landesbank in collaboration with Baden-Württemberg and 3 other German banks also conducted a pilot for issuing corporate bond using blockchain technology. The entire transaction was digitally carried out in parallel with the process that is required by regulatory authorities. This included various processes such as bond origination, distribution, allocation, execution of the loan agreement, and confirmation of repayment and interest payments. This increased the automation of financial transactions thus making them much faster and cost efficient by eliminating labor intensive manual steps.

Blockchain is now losing synonymity with bitcoin and is being acknowledged as an enterprise technology. At the same time, the stakeholders in the private equity trading and startup fundraising ecosystem are now looking beyond the hype of the ICOs to explore how this technology can work for them.

Using blockchain based platforms for private shares trading and SME fundraising can benefit several stakeholders involved in the private and SME fundraising ecosystem – startups and SMEs, angel investors, venture capitalists, private equity firms, crowdfunding platforms, and financial regulators, among others.

Some of these advantages would include:

• Standardization of the fundraising process
• Increased and streamlined access to investors for SMEs
• Better enforcement of regulatory compliance and contracts through smart contracts
• Reduction in time required to close private equity transactions
• Reduction in paperwork and associated administrative costs

There are several enterprise blockchain projects that have been initiated by different stakeholders, as they are keen to unearth the benefits that such platforms can bring to the table. While pilot tests in some of these projects have yielded positive results, there are several challenges that need to be overcome, before such platforms see commercialization. We also note that 36% of the projects have been successfully commercialized, 27% of projects have been shelved for various reasons.