Blockchain technology is a key disruption enabler of established, and most importantly trusted, broker industries – financial services being the biggest and most lucrative trusted broker service in the world. Trillions of pounds are moved around the archaic global financial system every day and billions of businesses and private individuals are serviced by companies that make up the vast industry. Still heavily reliant on manual processes, though dressed in a digital façade, finance system productivity is anchored with process delays, ever-rising expenses and is a relentless target for crime and fraud.
In an attempt to solve these ever-growing issues, blockchain, originally developed as the technology behind cryptocurrencies like Bitcoin, has been heavily invested in over the last few years. Investment to date has been primarily targeted at finance-focused blockchain start-ups and this focus of investment has lured many into the belief that the technology only has real potential in the world of finance.
However, the financial service industry is not the only trusted broker industry – real estate, antiquities and art, recruitment, and verification services to name a few all work on the same intrinsic model. Whereby two parties who want to exchange value are reliant on a third-party broker to enable the transaction to take place. In broker industries, what could be a simple two-party transaction is a three or more-party transaction that incurs all the associated cost and delay. Blockchain, has the potential to drive efficiency and simplicity in all these industries as well as bringing many more benefits. The World Economic Forum (opens in new tab) recently predicted that by 2025, 10% of GDP will be stored on blockchains or blockchain-related technology.
Blockchain is a vast, globally distributed ledger that runs on millions of devices and is able to record anything of value. Money, bonds, titles, contracts, CVs and virtually any other form of asset can be transferred and stored peer-to-peer (P2P), privately and securely because trust is established through network consensus, cryptography, and clever code.
One way that blockchain will impact every single trusted broker industry is by shifting the value from the current centralised broker model out to the edges. An historic example of an industry value shift due to technology can be seen in the advertising industry (opens in new tab). In the early 2000s, the US print advertising market was worth $16 billion but by 2009, the market had shrunk to $5 billion. The cause of this was the boom in digital advertising, that was lower in cost and quicker to execute than traditional print methods. The value was still being seen by those advertising, but the industry had been significantly streamlined resulting in $11 billion turnover disappearing.
Much the same will happen to all global broker markets that can be digitised. Margins will be significantly eroded, but value will still exist for its participants – the ultimate aim being to create more value than before and for this capital efficiency to be used to grow businesses and economies. While this may be threatening to some in those industries effected, in the long run this digital transformation will only increase value for those involved.
Recruitment in particular is one broker market that will be significantly improved through harnessing blockchain. Globally, the recruitment sector is worth £320 billion (opens in new tab) with the UK industry being worth around £35 billion. (opens in new tab) Further, the global verification sector market was valued at $8.7 billion in 2016 (opens in new tab), and this is forecast to reach $9.7 billion by 2021. However, like the finance industry, recruitment is stuck in the past and riddled with inefficiencies such as long and costly onboarding and verification processes and a lack of trust between candidates and employers. Verification and Recruitment platforms who look to harness blockchain in the industry, such as APPII or Technojobs (opens in new tab), will be able to remove these issues and drive value upwards.
The gig-economy has created a trend of high employee churn, with short-term contracts and freelance work becoming the norm as opposed to traditional long-term contracts with one single company. As such, candidates can have incredibly varied CVs, with multiple companies and job roles referenced. These CVs often take time to curate on the part of the job seeker and also to verify on the part of employers and recruiters. There is a real need now to quickly verify experience and skills on CVs, and often.
Harnessing blockchain will enable recruiters to offer verified career profiles for the first time. Stored securely on a blockchain, every asset added to the profile by candidates will automatically be verified by the organisations they pertain to, removing the need to spend significant time and money verifying candidates are who they say they are.
For candidates, an ‘Intelligent Profile’, or dynamic, verified, CV, that is easy to update and already verified by all previous employers and educators will make it easier to find and successfully apply to dream jobs, reducing the friction found in the existing recruitment process. They will also enter the hiring cycle knowing their CVs are viewed with trust from the outset. For employers and recruiters, blockchain-based CVs will make it significantly faster to find the best candidates, and at a significantly lower cost. Intelligent profiles will also increase productivity for both in-house and agency recruiters as candidates will already be verified. Overall, introducing blockchain to the recruitment sector will elevate value by streamlining the entire industry and ultimately improving the success rate of placements for all involved.
Critically, capturing and verifying identity is very important for ensuring personal information is associated with the correct individual, especially when adding additional assets to the blockchain-based intelligent profiles. To address this, platforms, like APPII, will need to introduce biometric identification to prevent identity fraud.
The potential of blockchain has yet to be truly harnessed, especially in industries outside the world of finance. However, blockchain, has the potential to drive efficiency and simplicity in all broker industries as well as a great number of other benefits; from reducing friction and onboarding time to bringing trust back into the recruitment industry and improving productivity. While the headlines may continue to focus on blockchain usage in finance, it’s important that we all recognise the technology can be applied widely across almost every single industry.
Gary McKay, Managing Director and Founder at APPII (opens in new tab)
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