If you keep hearing your tech-savvy colleagues and friends using the term “blockchain,” but still feel like you don’t quite understand what they’re referring to, you’re not the only one. Even top executives at large financial services firms are still getting a handle on the emerging technology and its potential impact.
Blaise Beaulier is vice president of enterprise projects and support at the Milwaukee-based life insurance giant Northwestern Mutual. He said that last year, at a lunch meeting of executive officers at the company, CEO John Schlifske sat down next to Beaulier. One topic on the agenda that day was blockchain, a way to create a public record of transactional data so that those transactions later can be authenticated, but which also allows the parties involved to keep certain information private by encrypting it.
“[Schlifske] said, ‘OK, Blaise. I stayed up all night last night reading a book on blockchain. Is this going to disrupt our company or isn’t it?,’” Beaulier recalled.
Beaulier didn’t have a straightforward “yes” or “no” answer for Schlifske, but said that prior to the meeting, engineers and software developers at Northwestern Mutual had been experimenting with blockchain technology and brainstorming potential applications for it in the insurance and financial services industries.
In September, the month after the lunch meeting, the company held a two-day, blockchain-themed hackathon, Beaulier said. The winning project came from a lawyer at the company, who pulled in two engineers to help him create a way to potentially replace the Entrust identity authentication tokens that some workers at Northwestern Mutual and other organizations are required to use when logging in to work remotely, Beaulier said. These tokens are physical objects, like USB drives, that contain digital keys and can be used in combination with a password or PIN number to prove the person’s identity.
“They created a replacement for [the tokens] on blockchain,” he said. “They were frustrated with the token—losing it, not being able to read it. They created a process that would do two-form authentication on blockchain.”
Beaulier said that employees at his company are now exploring whether they can turn the concept into a software product that can be used internally, or by customers of the insurer.
His comments were part of a panel discussion held on Thursday in Madison, WI, as part of WTN Media’s annual Fusion conference for business executives. Participants in the forum described a number of known and potential use cases for blockchain technology. They also brought up some potential legal and regulatory challenges that may lie ahead for officials tasked with monitoring the use of blockchain in the business world.
Before diving into some of the panelists’ specific examples, it’s probably useful to explain a little bit more about what blockchain is, and why so many leaders in the tech industry are bullish on it.
As Peter Kirby, co-founder and CEO of Austin, TX-based Factom, told Xconomy in 2015, blockchain is designed so that data on a transaction between two or more parties are stored “in blocks, which are then stacked like bricks in a wall or links in a chain.” These chains are visible to the public, but those involved in an exchange can use encryption tools to ensure that certain information contained in individual blocks is kept private. Blockchain technology underpins cryptocurrencies such as Bitcoin, which can help facilitate anonymous transactions.
One use of blockchain that has some leaders in the insurance industry excited involves
