By Meg Cipperly and Mark Hanrahan
In 2021 blockchain technology has dominated headlines as newsworthy events like the rise and fall of cryptocurrency values captured our attention. The impact on blockchain across financial services and insurance sectors however extends beyond the 24-hour news cycle. Here are four trends Competiscan analysts believe will have the greatest long-term effect.
1. Making Crypto More Accessible
Although cryptocurrency has existed for over a decade, in 2020 it reached new popularity, partially due to investment from payments companies like PayPal and Square—who made digital currency accessible to the everyday consumer. Despite the volatility of this new asset class, these companies have contributed to the increase in awareness around digital currencies. Competiscan anticipates that additional payments companies will announce product enhancements and partnerships to make buying, selling, and using digital currency for payments more convenient.
2. Using Crypto with Rewards Programs
The next frontier of rewards cards are credit cards with a cryptocurrency used as the rewards program emphasis. Competiscan has observed recent announcements from Gemini and BlockFi of product launches that allow users to earn rewards in Bitcoin and other digital currencies, directly into their trading account.
Due to the volatile nature of cryptocurrencies, these rewards programs come with greater potential upside, and downside, for consumers. For this reason, we anticipate that these products will be most popular with individuals that are already active crypto traders, and especially those that are comfortable with the idea of volatility in their rewards balance.
3. A Crowded Marketplace for Retail Traders
Although 2021 has been a volatile year for this digital asset class, the number of companies marketing cryptocurrency solutions has increased and is likely to continue. Those offering crypto products have launched new enhancements throughout the year. Meanwhile, others have focused on investor education regarding trading digital currencies. Newsworthy events like Coinbase’s IPO and exploding interest in NFTs has increased investor awareness as well. Despite the dramatic rise and fall in value of cryptocurrency, we believe interest from retail traders will continue to drive innovation and product launches in this category for the near future.
4. Blockchain and the Customer Experience
Streamlined and simplified processes are a major focus of both the insurance and human resources industries and blockchain technology presents some interesting opportunities.
The blockchain leverages a decentralized system which can offer extra transparency and security. The architecture of blockchain consists of a group of computers or nodes, each storing a full record of every transaction or interaction. Should one node have an error, the other nodes in the blockchain can easily identify and isolate the error. For cryptocurrencies, every purchase or sale is stored on the blockchain.
One of the more arduous processes in both insurance and human resources is employee onboarding and enrollment. Satisfying legal requirements, background checks, and essentially confirming that employees are who they say they are can be a difficult and time-consuming task. This is where the blockchain presents certain advantages. Utilizing blockchain technology in this space would only require an initial full onboarding experience. From then on, the information would be stored and confirmed by the other nodes in the blockchain and essentially eliminate much of the current processes.
Companies like chrono.tech in Australia have already incorporated this technology into its HR products and we expect to see even more in the future.
Beyond enrollment, Competiscan expects to see a rise in the use of blockchain in other applications like underwriting, product development, and the claims process.