No Second Chances When it Comes to Dominating Auto Finance Blockchain

It can be difficult to predict the threshold of new technologies, but what is not difficult is understanding the significance of them.

Blockchain technology falls under this category: We know it has huge implications across a variety of industries, but the technology has not been perfected yet — meaning whoever or whatever is first able to deploy a viable system, can benefit from a winner-takes-all by defining the standards for the tech.

Over the past few years, more than 90 banks have engaged in blockchain discussions worldwide, while over 90 companies have joined or formed some kind of blockchain consortium, according to a report Blockchain @ Auto Finance from Deloitte Consulting LLC.

“Leveraging its decentralization paradigm, blockchain technology has the potential to solve many trust requirements that today burden a large number of business processes and interactions, by clearly recording all historical and current ownership rights of a given asset at any time without requiring any intermediaries,” the report states. This means that the potential impact of blockchain will be significant as it can be used by a variety of disparate industries. And mobility is no exception.

“[Blockchain] enables a completely new form of mobility that we believe customers are currently longing for,” Sebastian Pfeifle, an author of the blockchain report and partner/auto finance lead at Deloitte Consulting told Auto Finance News. “The question now for everyone is how fast will this happen and what will the impact will be?

While it’s not possible to determine who or what will come out first, it is possible to look at what global regions are focusing heavily on the technology. For instance, activity in the United States and in Europe is higher, while there is not a lot of exploration of blockchain from China or Asia in general, Pfeifle said. Something that could significantly advance one region ahead over another is if there is an appeal to federal government, Massimo Ferrari, another author of the report and senior consultant at the blockchain institute at Deloitte, told AFN.

“Regulatory concerns will also play in this,” Ferrari said. “If big players start coming together and asking the government to be more open, it would a huge break through.”

But because there are so many players — and it’s a new technology — there’s a lot at stake, Pfeifle said. “This also has the potential to be one of those winner-takes-it-all, because the nature of what blockchain does, is [the ability to] scale … There may not be a second chance.”

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