Interconnect 2017: IBM and Securekey Move to Corner Financial Transaction Market

Rob Enderle

This week, I’m at IBM Interconnect 2017 and, right off the top, they made a really interesting announcement concerning Blockchain. Typically, we connect Blockchain to Bitcoin, but the digital currency may be the least interesting part of this technology that is basically designed to provide secure private transactions. The goal of this joint effort between IBM and Securekey is to turn your smartphone into the only thing you need to complete any transaction, from buying a stick of gum to financing your home. It is a showcase for something both companies have been working on called Hyperledger, and it is tied to the recent release of version 1.0 of the Hyperledger Fabric, representing its first commercial release.

Let’s talk about how this all works and why any company not participating in this Blockchain/Hyperledger revolution may quickly find its customers have gone elsewhere.

The Problem

The banking and financial community has a problem. There is way too much crime consuming far too many resources, and as they attempt to make crime more difficult, they have also massively increased the pain placed on customers needing to do legitimate transactions. For example, we just finished a simple refinance (effectively just shortening the term of our loan), which should have been easy, but it took months of reports, validations and pain, all of which would have us never wishing to do this again, particularly with our bank (the same bank the initial loan was with). Making this largely automatic, without increasing the risk of theft massively, has proven problematic pre-Blockchain.

Blockchain

What Blockchain does is provide a system where information is contained by validators that the customer trusts and that trust the customer. These institutions know who you are and know the information that surrounds you. The entire system validates the person using the system and assures the validity of both parties in a transaction without exchanging personal information and opening either to identity theft. You get a relatively risk-free secure transaction.

Hyperledger Fabric

The Hyperledger tracks the transaction and its elements and assures that, if there is a problem, the transaction can be reversed. The mechanism assuring this is complex; it is virtually all handled by computers, each of which is validated in the system, and the complexity is concealed from the user and vendor. A complex transaction can be concluded in moments and since the identities of the parties are fully validated, this has the added benefit of complying with anti-money laundering laws as well which, coupled with the reduction in theft and potential increase in customer satisfaction as a result of using Hyperledger and Blockchain technology, should help fuel adoption at a very high level once in production. (Currently this is in trial but parties are expected to release this before the end of 2017.)

Classes of Information


What is also interesting in this coming information is the broad classes of information that can be validated. This can range from health and medical information (assuring prescription accuracy), to clothing sizes, preferences, and even the kind of car you drive. Really, there is no limitation and this would assure that you get the right meds, clothing that fits (granted, there will need to be an automatic mechanism to adjust for growth), and parts that actually fit your car. A side benefit could be never having to return something because it is the wrong color or size.

IBM/Securekey Experience

The solution the two vendors are showcasing surrounds a smartphone app, which the user uses to manage the exchange of information. In the secure app is the information that defines them and then they choose when to share that information with a vendor, government agency, etc. The agency then uses the agreed-on validators to assure the user is who they say they are and that the information is accurate, a process that takes moments. If the process completes successfully, the transaction is approved. You get a transaction that is credit card easy but without the risks currently associated with credit cards, and a potential breadth of transaction types that credit cards simply can’t touch.

Wrapping Up: A Revolution?

I don’t think many of us considered the kind of revolution that Bitcoin was going to create even in areas that don’t currently use Bitcoin. This innovative use of Blockchain could do some rather fascinating things to how we do transactions. Even things like paying taxes or voting could eventually be dramatically changed, because at the heart of this is a validated identity and once you can assure a person is who they say they are with a very high degree of accuracy, there are few limitations to the kinds of transactions you can use the related technology to accomplish. Both IBM and Securekey want to be at the heart of what could become a revolution not just in how we do business but how we relate to everything, and open the door to a level of change we can’t yet imagine. Now, that’s a hell of a way to start off IBM Interconnect.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+



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