A New Foundation for Cultivating Customer Trust
Imagine if you could rent a house, buy a car, be admitted to a hospital, get a driver’s license, apply to college or seek employment – all with just a few clicks of your smart phone.
Just think if you could track the progress of a product you were interested in along every step of its life cycle, ensuring that the companies you transact with adhere to best practices within the workplace, promote environmentally friendly production and distribution methods, and use top quality materials in the goods they offer?
What if digital data were readily accessible without the need of a third-party intermediary, but still remained secure, easily verifiable and unalterable? Welcome to the world of Blockchain.
Though still in its formative stages, Blockchain’s arrival on the scene is good news indeed for today’s consumers seeking greater control over their personal data and more focused insight into the companies with whom they do business. While many still think of Blockchain as primarily a cryptocurrency facilitator – basically, a new way to pay – its potential for the customer extends far beyond its monetary conveniences.
Blockchains are basically groups of transactions, each of which is stored within a “block”. These blocks are locked using cryptographic algorithms, and create private keys granting access only to those with proper permissions. Every block is time-stamped, sealed, and linked to the preceding blocks, forming an interlocking chain. Simply put, a blockchain is just a ledger that records the interactions of two parties whose identities have been verified by one another, allowing each to track the transfer and ownership of assets and data. It’s amazing that such a simple concept as being able to securely lock a record and link it to other records can provide such a transformational benefit. This has tremendous potential for increasing the customer experience, as it:
- Simplifies transactions by directly linking customer and company
- Grants oversight of personal data to the individual
- Offers transactional transparency that allows for greater trust between parties
Of great interest to today’s self-sufficient, hyper-connected customer is Blockchain’s ability to shift control of data from institutions to the blocks themselves. Since the data for each transaction is stored directly within the Blockchain, rather than managed by one of the involved parties or a third-party intermediary, an even and objective playing field is created, thereby promoting mutual trust.
To achieve this, Blockchain uses distributed ledger technology, which removes the need for centralized, privately managed databases in favor of a shared ledger spread throughout a peer-to-peer network. Every full node has a copy of the blockchain, making the information within impossible to tamper with, quickly verifiable, and readily available. Neither party has the upper hand, and all transactions become transparent. In short, customers will no longer need to rely on the word of a company – the data will speak for itself, without additional spin or manipulation.
The Dawn of the Digital Wallet
The introduction of the General Data Protection Regulation (GDPR) has highlighted the need for corporations to respect their customers’ right to privacy, and Blockchain could prove quite useful in this regard. If the distributed ledger technology at Blockchain’s core were to eventually replace today’s centralized structure for mediating online transactions, customers would benefit from greater control over their personal data through the introduction of digital wallets. Serving as a gateway to all of an individual’s Blockchain transactions, such wallets would contain a repository of each person’s data and allow users to manage and distribute their information as they see fit, rather than rely upon the judgement of outside vendors and corporate entities controlling their own database silos. This would allow individuals to only grant access to their private data and preferences to those parties with whom they are transacting, resulting in a more secure, personalized experience.
What’s more, digital wallets would include non-financial data as well, letting users quickly share their information with organizations and institutions seeking proof of identity before providing services. This would greatly increase the ease and efficiency of applying for a passport, driver’s license, car loan or mortgage, as well as sharing such private information as hospital and education records and employment history. In time, digital wallets may even come to include management of – and access to – all the data a user creates on social media and records of online purchases.
Transparency Leads to Trust
With access to information available at the fingertips of today’s social media savvy consumers, companies looking to build trustworthy brands need to show a willingness to share their business processes and intentions with today’s hyper-connected customer. As I’ve mentioned in earlier blogs, forward-thinking Corporate Social Responsibility programs are making good use of consumer curiosity by working hard to promote a standard of global honesty and accountability, and the real-time transparency enabled by its distributed ledger structure makes Blockchain the perfect tool for achieving such openness.
By providing keys to their Blockchains in the form of easily scannable QR codes on their products, distributed ledger technology solutions have the capacity to share a product’s entire life-cycle with interested customers. As an example, French supermarket chain Carrefour has implemented such a process for its chicken sales. Interested consumers can use their smart phones to quickly access information from the breeder to the butcher to the supermarket shelves, assured of the validity of each step thanks to the unalterable data and time-stamping that result from Blockchain’s decentralized database. Shoppers can then base their selections upon such data as where the chickens originated, what they ate, and whether they were given antibiotics. In this way, consumers know what to expect from their purchases because there is a transparent, secure record throughout every transaction along the entire supply chain.
Blockchain’s benefits to a corporation’s bottom line are obvious – its low-cost, peer-to-peer structure removes the added expense of time consuming database management, oversight and storage, without the need for additional investments in cloud infrastructure. But its real value lies in allowing companies to prove their worth to modern customers reluctant to place their faith in large organizations. By laying their cards on the table and promoting personal control of private data, smart companies can use Blockchain’s foundations to build a bridge of trust between themselves and today’s hyper-connected, well-informed, often skeptical customers. After all, mutual trust is the key to any long term relationship.