Using Blockchain to Build Your Dream House

Distributed ledger technology, otherwise known as blockchain, can significantly simplify bank guarantees and guarantees of insurers, reducing paperwork while providing time-saving transparency for financial institutions and their customers.

I saw an example of an interesting scenario at the recent SAP Financial Services Innovation Summit held at the SAP Leonardo Center in New York.

SAP’s Stefan Schmidt recently shared a blockchain POC called The Guarantee Network on Blockchain

Stefan Schmidt, Innovation Manager at SAP for Insurance, walked the audience through a blockchain POC called The Guarantee Network on Blockchain. Running on SAP Cloud Platform, it depicted how the various parties involved in new building construction – contractor, bank, insurer and buyer – could use digital certification to share information quickly, obtain necessary signatures and approvals, and prevent fraud.

“When you create a guarantee, and distribute the information in the secure digital ledger, everyone receives accurate digital signatures with the correct amount of money and policy data including ownership and end dates,” said Schmidt. “The guarantee is assigned to one creditor, and cannot be copied or misused. With the complete transaction history inside, you can trust the digital ledger.”

Blockchain promises to give financial institutions better tracking visibility to help mitigate risk and speed up what until now has been a cumbersome, paper-based process.

“The distributed ledger guarantees transparent ownership of the guarantee,” said Schmidt. “Going paperless lowers operational costs and reduces response times while companies are assured of the secure transfer of real digital values. There’s no additional documentation required for the certification, but of course the bank can manage additional documents with the application.”

#Blockchain can provide time-saving transparency for financial institutions and customers

Schmidt said blockchain is well-suited to guarantees because of the technology’s inherent characteristics.

“There’s a need to generate trust without a central authority, and have one single point of truth and one version of events in a short timeframe,” he said. “Blockchain provides decentralized control across peer-to-peer interactions involving immutable records making it auditable for regulatory compliance.”

Top Use Cases

When asked about the most popular use cases in banking for blockchain, Schmidt said payments were high on the list, along with know your customer initiatives.

“Financial institutions like banks and insurance companies need a simplified and more secure way to transfer digital assets and contracts,” he said. “The SAP Blockchain Early Access program is a great way to explore how the financial and other industries are developing POCs for new kinds of business models with higher speed, more trust and lower costs.”

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