Tokyo, June 7, 2017
NTT DATA, a global IT service provider, announced that it has successfully tested Japan’s first prototype of a smart insurance policy based on blockchain, proving that blockchain offers attractive security and cost advantages for shippers and insurance companies. The smart insurance policy prototype is the latest step taken by NTT DATA under a vision to innovate a new international trading system with blockchain, a distributed ledger that creates an unchangeable record of transactions.
Blockchain, the core technology of cryptocurrency, enables all users participating in a network to share the same ledger. In addition to cryptocurrency, the technology shows great promise for application in the fields of financial securities, manufacturing and international trade. NTT DATA is implementing a strategic plan to develop FinTech technology based on blockchain’s decentralized ledger model, leveraging its R&D centers in Japan, the USA (Palo Alto) and Italy (Cosenza) as well as its parent NTT Group’s overall 2 billion USD investment in R&D.
In the field of international trade, NTT DATA envisions adopting blockchain technology to enable transactional parties, including shippers (exporters), consignees (importers), banks, insurance companies, and carriers/forwarders, to share information simultaneously. The expected benefits include a significant reduction of transactional processing time, maintenance of transactional information integrity and reduction/elimination of document delivery costs.
Last year, NTT DATA began taking full-fledged steps with stakeholders to verify its concept of innovating a new international trading system. The first prototype of a smart letter of credit was tested to verify the practicality of exporters, purchasing banks, issuing banks and importers using blockchain.
The second (current) prototype was developed collaboratively by Tokio Marine & Nichido Fire Insurance and NTT DATA and then tested from December 2016 to March 2017. The test proved that blockchain offers attractive security and cost advantages for shippers and insurance companies. Compared to conventional web-based systems for issuing insurance, the test showed that a system based on smart insurance could reduce the shipper’s data-input workload by about 85% and the insurer’s workload by about 83%.
The test also included making an intentionally malicious revision to the nodes to see how the blockchain would react. The result was successful, when one block was revised in the mock attack, the attacked block was not distributed to other nodes due to its data inconsistency, but the rest of the blockchain system continued to function normally, proving that only legitimate transactions are permitted.
According to Tetsunosuke Shinya, the manager at Tokio Marine & Nichido Fire Insurance, “In international trade transactions, the time lag between delivery and payment can create risks, especially if the companies are far apart geographically and if the cargo shipment takes time. To avoid such risks, there is the universal business practice of utilizing letters of credit issued by banks, but this procedure is a little complicated and can take some time. We are pleased our proof-of-concept test has shown that our blockchain prototype can resolve these problems.”
Yoshiharu Akahane, the general manager of NTT DATA’s Financial Business unit, said, “Going forward, we plan to invite many companies to join our initiative and eventually commercialize a system for a blockchain-based international trading system. The goal is to launch the system in Asia and then expand into other regions including Europe and the United States.”
NTT DATA ultimately hopes to apply blockchain technology throughout the entire international trading system. As the next step in its vision, NTT DATA plans to test a new prototype that will include carriers/forwarders by the end of 2017.
Source: NTT DATA
Illustration Photo: Loading containers to the cargo (Public Domain from Pixabay.com)