Initially devised to enable secure trading over the internet using the virtual currency Bitcoin, Blockchain is poised to transform public services.
For procurement, finance, maintenance and asset management departments it is a gift – offering secure, automated transactions that cannot be tampered with without leaving electronic fingerprints all over the scene of the crime.
Blockchain is a distributed ledger technology (DLT). This means that each user has their own identical copy of transactions. Each transaction is stored in its own fingerprinted, time stamped block, and each block recognises and links to the previous block. Tamper with one block and you effectively create a new fingerprint that isn’t recognised and therefore disrupts the chain. That is why Blockchain is so secure that it is now being used extensively in finance, shipping, in the diamond industry and by art dealers.
Housing associations and public sector bodies are starting to take notice because Blockchain and other DLTs have the potential to transform procurement, substantially reduce the administrative burden and add trackability, visibility and security to all transactions.
A clear example of this is in smart contracts – contracts written in code that can be built to self-review based on established trigger points. In a housing association or local authority housing department, for example, there could be an agreement that says when an oven breaks in a tenant’s flat a contractor will replace it with an agreed product at an agreed price within a specified timescale.
The agreement to purchase would be contained within the smart contract and communicated automatically to the supplier. When the work is completed to the satisfaction of the housing association, payment would be automatically made. Any bulk discounts negotiated as part of the agreement would be automatically applied. The contract could also include a trigger that says that if the supplier delivers late on 10% or more of their contracts within a 12 month period then payment will fall by 20% for each unit. Contracts with suppliers could be shared across multiple smaller housing associations to achieve economies of scale.
Overstretched housing associations will no longer have to accept financial losses through human error, loss of documentation or poor supplier performance simply because they don’t have the people to physically go out and do the legwork or because, frankly, they have bigger fish to fry.
There is potential for larger associations to support and validate a system from which smaller associations could benefit in return for a small transaction fee. A shared model of this nature is the best way to transform services and make major savings.
In the wider public sector, the UK is one of the D5 group of nations looking to lead the world in the development of Blockchain and related DLT technologies. The Government Office for Science last year published a report, Beyond Blockchain, calling for DLT trials within central government and local government demonstrators, including one at city level. The UK has also recently launched the second phase of a controversial pilot scheme using DLTs in the registration and payment of welfare benefits, partly to reduce losses through fraud and error.
My message to PfH Live is that Blockchain, often described as the biggest technological revolution since the internet, isn’t just for big private companies looking to make lots of money. It has huge benefit for social landlords and public bodies that rely on manual processes and interactions, particularly those requiring a great deal of certification, security, visibility and validation.
For housing providers and other public sector organisations, this could be the technological answer to questions about how to streamline and improve services without a massive jump in costs; how to keep staff on the frontline rather than tied up with admin; how to improve interaction with citizens and service users; how to validate purchasing and agreements without manual tracking and tracing; how to manage contractual relationships; how to get money to where it is meant to be and keep a close eye on how it has been spent; and perhaps, finally, how to deliver the much vaunted paperless office.
Housing associations should take the initiative now, review their processes, interrogate their business plans, talk to their trustees and sector bodies about the potential for collaboration and begin to prepare for the rise and rise of Blockchain.
Glenn Thorsen is a futurologist and co-founder of Mastermindset.
This article first appeared in Government Opportunities on 31 May 2017, http://www.govopps.co.uk/glenn-thorsen-blockchain-poised-to-transform-public-services-2/