Blockchain has a bit of buzz around it right now in case you hadn’t noticed. The soaring (and dipping) value of cryptocurrency has brought more eyes on blockchain and distributed ledgers, the very technology that underpins bitcoin and many other virtual currencies.
The technology has far-reaching potential, mostly in sectors like finance, insurance, and health, promising to revolutionise payments and trade. Of course, there’s a lot of hype and bluster too but fundamentally, proponents claim that blockchains, distributed ledgers, and decentralised systems can solve many challenges in the enterprise, whether it’s data privacy, transferring information, and process verification.
There are a lot of players vying for the lead in this space, and France’s Stratumn is one of them.
“We were looking at solving problems in the enterprise domain with the technology. Specifically, we’re focused on solving one problem which was inter-business processes, security, automation, and traceability,” said CEO Richard Caetano, who co-founded the company with Stephane Florquin and Sebastien Couture.
Last year, they raised €8 million from investors including BNP Paribas.
Processes that involve multiple companies and transferring customer information is a massive pain point, whether it’s in insurance, trade finance, or the supply chain. These are typically highly-regulated processes.
“We developed a technology stack that we call Proof of Process. It combines blockchain networks with advanced cryptography to create a protocol where multiple organisations can prove to each other the integrity of a step in the process.”
Stratumn has struck a particular chord in the insurance space. Blockchain is being explored at different levels by the insurance industry, whether for fraud detection, claims management, or reinsurance. However, according to a McKinsey report, “its exploitation is still a long way off” because it will require a great deal of collaboration within the industry and among competing forces. The report went on to say that blockchain generally is an IT investment that will take a good five years following deployment before its benefits are truly felt.
We’ve seen this in the financial sector – there is a plethora of tests and proofs-of-concept but things thin out when it comes to actual deployments and fully operational features.
Stratumn, on the other hand, believes it has a solution that will let competing insurers operate in tandem. It is in the midst of a Proof of Process trial with the insurance industry that’s starting to yield some tangible results. It’s currently working with the French Federation of Insurers (FFA) and professional services firm Deloitte (which has committed a lot of resources to blockchain develop) to deploy Proof of Process.
The insurance platform was developed in response to France’s Loi Hamon, a new set of consumer protection regulations that allow customers to switch insurance provider after the first year of coverage. The law requires insurance companies to streamline this whole process and complete it within 30 days.
Traditionally this process was slow and drawn out, where one insurer mails the other the relevant customer data via registered mail to ensure it has been delivered and received.
“On this network we’re able to map each step of the Hamon law. Then we use cryptography to mask all of the information so that the customer data is private,” explained Caetano.
“On each side of the process, the insurers have a dashboard which allows them to see all movement of data on the network but only what pertains to their side of the story.”
In a world where GDPR is fast approaching and the topics of data privacy and breaches are never far from the headlines, the platform may still raise some questions around customer data and who gets to see it.
“While all those features are great, you still have the issue of if it’s an open network, is it really fair that these 12 other insurers can see which two other insurers are transferring a policy?” added Caetano.
“That’s where we bring in the cryptography. We’re able to bring in the elements to the customer, to the regulator, and to the other partner on the network without revealing information to the other competitors on the network.”
The trial is ongoing with 14 insurers and the next step will involve scaling the platform to accommodate 40 insurers and making it fully operational in Q1 of this year. Proof of Process has a long-term goal of facilitating 280 insurers.
Stratumn is also in the midst of a supply chain trial using the platform with an as-yet-unnamed client that’s tracking products moving between countries. The trial is up and running with real data and the company expects to make an announcement in the coming weeks. The third major area for Stratumn is of course finance – the most common and popular use case for blockchain technology – and the company added that it will be making some kind of announcement at the Paris Fintech Forum at the end of January.