Where the Blockchain Tipping Point for Auto Finance Lies

Blockchain has many potential use cases for shared autonomous vehicles, including ensuring user privacy, issuing smart contracts, and making it possible for the car to be completely autonomous from the financial point of view.

Suffice to say, blockchain has the capability of enabling the future of mobility because it not only involves OEMs but also end-consumers, dealers, financiers, and ultimately anyone who deals with mobility services, according to the report Blockchain @ Auto Finance from Deloitte Consulting LLC.

Because of this, the interest in blockchain tech has grown significantly since 2013, with over $1.7 billion in investment in the last three years.

But while the conversations around blockchain are ubiquitous, the real-life implementations have yet to reach the same level as the technology is still in its infancy, said Sebastian Pfeifle, an author of the blockchain report and partner/auto finance lead at Deloitte Consulting. Essentially, the tech has not developed enough to reach the tipping point or threshold of uses that would make the use of blockchain commonplace.

“What we are seeing today is that a lot of automotive companies, captives, and fleet management companies are experimenting with blockchain, but it’s still at very early stages,” Pfeifle told Auto Finance News. Tthe reason blockchain has yet to pervade auto finance completely is because there are still scaling requirements and technical issues that need to be solved in order for the tech to have the capacity to grow “exponentially,” he added.

There is also the issue of user-friendliness, Massimo Ferrari, another author of the report and senior consultant at the blockchain institute at Deloitte.

“When we get to the point of people who can use blockchains without needing to understand what is underneath, I think it will really take off,” he told AFN, adding that blockchain would likely be similar to the internet in the sense that most people do not understand how it works but are capable of using it. However, the internet we know today also took more than 30 years to happen, and blockchain may also take equally as long, he said.

In the end, the company or industry that figures out how to problem-solve the issues blockchain currently has is in the best position to set the standard for the industry, resulting in “winner-take-all” economies of scale and scope, Ferrari said.

“The first one to really embrace and understand, or at least an attempt to a clear vision on what do with this new technology, will be able to … attract the best talent and in turn provide the technological solutions to — at the end of the day — help customers have a better experience,” Ferrari added.

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