Ever since banks and other financial institutions around the world have started to show an interest in blockchain technology, the Bitcoin community has been speculating on what projects might entail from this interest. In the case of Lloyd’s, one of London Market’s key players, there seems to be a keen interest in using blockchain technology to revolutionize insurance markets as we know them.
Insurance Sector is Ripe For The Picking
The financial sector has seen little to no innovation over the past fifty years, and the lack of thinking ahead is clearly showing as of late. In fact, hardly anyone can make sense of the financial system we use today, not even the people who are actively working in the sector on a daily basis.
Insurance is one of those odd creatures that exist in the financial world. While the principle of issuing insurance is clear as day to anyone in the world, it remains a bit of a mystery as how these deals are enforced. One thing’s for sure though, the administrative costs associated with insurances have skyrocketed, and things will need to change sooner rather than later.
This is where blockchain technology can play a key role in the process, or at least, that is what Lloyd’s seems to think. While reducing the cost of insurances will be decreased by quite a margin, blockchain technology will also provide improved data access for all parties involved. Streamlining complicated processes is beneficial for our society and blockchain technology will be the driving factor to achieve this goal.
But there are more benefits to implementing blockchain technology than just cost-cutting measures and increased data access. An increase in risk-recording abilities, providing additional transparency, improved accuracy, and most importantly, an increase in speed, are all features the insurance sector drastically needs.
Another major advantage of using blockchain technology in the financial sector comes in the form of securely sharing and logging any type of document. Implications can range from insurance documents to authentication documents. Also, financial institutions would be able to issue their own token(s) on top of the existing blockchain to track assets.
Putting An End To The Paper Trail With Blockchain Technology
One thing most people might overlook is the sheer amount of paperwork associated with the current financial system. Creating a bank account, obtaining insurance, receiving a credit card bill; all of these mundane things require a hefty amount of paperwork. Blockchain technology can eliminate the need for any paperwork.
More and more consumers are slowly starting to embrace their digital lifestyle, although there are very few financial aspects available in a digital form. Revamping this entire industry will not happen overnight and Lloyd’s plans mention how they plan to do things step by step over the next five years.
Whether or not this move by Lloyd’s will be a successful one, remains to be seen. It is not the first time people have tried to streamline the insurance process by bringing in new technologies or ideas, and none of the previous attempts has been successful. However, the world has never seen anything like blockchain technology either.
Images courtesy of Shutterstock, Lloyd’s
Also published on Medium.