A platform based on truth and trust at the base of the digital revolution in the finance and insurance sector. The risk for companies is to approach this evolution from a partial point-of-view, either solely strategic or solely technological.

Blockchain on the Agenda Priorities of Top Management

Why blockchain

Blockchain is best-known for being the algorithm that forms the basis of cryptocurrencies and is often used synonymously with bitcoin. In reality, given its characteristics, blockchain can be used for a variety of non-currency related applications, but ones that are just as interesting because they impact on the agenda priorities of top management.

Three areas are of special current interest:
  • Efficiency—Reduced costs: process updating, simplification, disintermediation.
  • Innovation— Digitalization of services: business model reassessment, diversification, differentiation.
  • Cybersecurity—Truth, Trust and Integrity: customer protection, reputation, service fruition, confidentiality of sensitive data, qualities seen as resources on which to build corporate value.
Therefore, blockchain’s potential applications are many and certainly should be considered.    

But how? What is the best way to introduce these technologies into the company? Unquestionably, it requires vertical technical expertise, but this does not represent everything and taken on its own could be misleading. The profound implications for business strategy would indicate a multi-disciplinary approach that puts technology-related aspects at the service of business assessment.

The risk for companies is to approach this evolution—which is rapid and whose developments are uncertain—from a partial point-of-view, either solely strategic or solely technological, neither of which, on its own, is sufficient to provide the information required by management.

The European House – Ambrosetti has dealt with this technology from its inception, creating a functioning blockchain designed to allow our clients to rapidly test their applications. By easing the technical aspect, attention can be focused on business opportunities and the various implications.

How blockchain functions

Blockchain is a technology that uses a software algorithm to register transactions, or any other digital interaction, in a safe and reliable manner.

In essence, this is how blockchain works: when a transaction occurs, a certain number of computers connected to the network verify the transaction.

The basic information of every transaction is logged (data such as the sender, receiver, time, asset traded and amount). Each new transaction is connected mathematically to all the previous ones so that the blockchain process can guarantee its validity.

Once included in a blockchain, the information cannot be canceled, therefore a blockchain contains an accurate and verifiable record of all transactions made.

Blockchain technology provides a transaction method that does not require third-party validation, therefore the prevailing logic is “trustless”.

Potential areas of blockchain application

In addition to cryptocurrency and payments in general, other areas of application for blockchain include:

  • Digital Assets: creation of bonds, property titles, fidelity points, etc.
    Example: an application has been created that makes it possible to connect metadata to transactions by taking advantage of blockchain infrastructure to issue and exchange unmodifiable digital assets. The issuer guarantees to redeem the digital assets at their real value. They may be used for financial securities, property titles, etc.
  • Identity: creation of verified digital identity.
    Example: a security application enables encrypted operations between individuals that recognize each other on the Net: chat rooms, file sharing, document publication, etc. This solution, which is also a web-directory of individuals, solves the problem of the solidity of the encryption system by subordinating the exchange of information to the reciprocal recognition of the two parties whose identities are connected to a blockchain and, therefore, unmodifiable.
  • Probatory data: record creation of any type of data, file or business process.
    Example: a process was developed that is used by insurance companies to receive claims and acknowledge their receipt via blockchain. This allows both parties to have verifiable and incontestable record of the original claim, thus reducing error, fraud, and verification and litigation costs.
  • Smart contract: performance of contracts that “live” in the blockchain and, when the agreed-upon conditions are met, are executed without the possibility of third parties interfering.
    Example: using a custom blockchain, contracts can be executed without intermediaries or counterparty risks. Data is private, the app is distributed.

All the areas listed above involve the three priorities of efficiency, innovation and security, with different impacts depending on whether the services are extended to customers or if they are limited to the company.

Main impacts on the three priorities of the blockchain applications
Areas of extension/
Efficiency Innovation Security
Digital assets √√√ √√
Identity √√√
Verifiable Data √√ √√√
Smart Contracts √√ √√√

(Innovation: product-service and/or process; Security: cyber security or process)

The type of impact each area of extension could have on the three priorities depends on the application perimeter (inside or outside the company), the goals and its technical characteristics, but it seems clear to us that, potentially, the capacity for innovation is such that it could result in a competitive scenario change for entire segments of the financial and insurance sector, with a different definition of reference markets, customers and competitors.

The sectors on which blockchain technology could have major impact are given in a Coindesk report (2016).


We are at the beginning of a phase of change, a pioneering phase in which experimentation in blockchain technology will grow rapidly in various fields and undertaken by numerous players, with uncertain results. The way in which some of the activities of the financial and insurance sector are currently offered and utilized is destined to change radically. Imagining what the transformations will be and how they will occur is, today, an ambitious and complex endeavor.

We believe that for organizations in the financial sector that need to adapt their IT infrastructure to growing pressure from the regulatory body and cyber criminals and, perhaps above all, from the challenge set by digital development and use of their services, the blockchain represents a significant opportunity.

Seizing this opportunity requires both rethinking and redesigning some business processes, and enabling new technologies. And all within the context of major uncertainty that also characterizes regulatory bodies which are clearly experiencing difficulty in formulating so quickly the guidelines and policies they need to adopt.

Our experience would suggest an incremental approach; in other words, we propose the development of small-scale projects in controlled environments, within the perimeter of the company. By making available to them a blockchain infrastructure that is functional and coherent with their specific needs, we help our clients to remain technologically up-to-date and maintain the flexibility required within a rapidly-changing environment.

This flexible and prototypic approach lowers risk and develops technical know-how and method to elaborate strategic approaches involving:

  • Governance and IT Security
  • Efficiency
  • Innovation.

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