Blockchain and cryptocurrencies are impacting every industry by supporting the move towards:
- Customer experience disintermediation – removing the middle man (such as a bank or a broker)
- Use case efficiency, new open systems and cost savings
- New economic models where participants will have incentives to use the system.
Challenger banks like Revolut and N26, mobile payment systems like Ant Financial, Ali Pay, Tencent and PayPal, among many others are executing precisely these changes in the financial services sector. They are zealots about customer experience and cost savings.
These new digital drivers will further disrupt existing business models. But we are not there yet with crypto technologies, there is a little time still.
Telecoms must be no exception at exploring the potential of blockchain to make common transactional processes cheaper, faster and more transparent.
In the future, operators should consider how blockchain could impact their business and/or bring opportunities in operational areas and digital services, as described by Analysis Mason below.
As an example of how a considered approach is successful, we (Institute 4 Entrepreneurship) worked with the Wala Platform, reviewing the necessary elements to assess its blockchain project which used the Dala utility token as a medium of exchange, helping it to potentially disrupt the mobile operator success story, MPesa, and other such entrants.
What is MPESA?
M-Pesa is a mobile phone-based money transfer, financing & micro-financing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. It has since expanded other markets.
However MPESA is still expensive, tied to a carrier and constrained geographically.
Enrique Velasco-Castillo and Karim Yaici, both lead analysts as Analysys Mason reported “Operators in Sub-Saharan Africa must develop their mobile money offerings into full banking services to remain competitive.”
What is Wala?
Wala, is a mobile financial services platform built on the ethereum blockchain.
The platform is tackling financial exclusion with the mission to close the gap between consumers and financial service providers in emerging markets. Wala works with specialist providers in each market they’re operational in, including banks, to offer a full suite of financial services like transactional banking, remittances, loans and insurance. Partners benefit from the reach and low-cost access to previously unserviceable customers enabled by the Wala platform.
How to assess a blockchain project
Here we use the approach of Micheal Lewick, Chief Innovation Officer at Swisscom.
The seven steps detailed in his book describe a holistic approach in assessing a blockchain project:
1) Why use blockchain?
Why blockchain and which problem should be solved with crypto and blockchain? In the case of the Dala Token, the answer is clear: the problem to be solved was to avoid using cash and manage digital life securely from your phone preventing the double spending of digital currencies.
2) Business case & associated team
As for any new Ventures, the business case must be coherent to justify the investments. However an relevant advisory team is important to support company growth where blockchain projects requires a variety of skills from technology and process know-how to regulatory and compliance expertise.
3) Business ecosystem design
Decentralized concept required as well a more collaborative approach of digital interaction. The new business ecosystems must be designed to ensure all participants in the ecosystem have an incentive and a clear value proposition.
4) Legal & Compliance
One of the difficult aspects considering the difficulty for regulatory framework to support this emerging technology in the existing framework in place. Starting from the nature of Smart Contracts up to the selection of the right token model ensuring the right Token economics for the project.
5) Token economics
This is a subject in itself, highly related to the project funding process called ICO (Initial Coin offering) and has the potential to be one of the biggest paradigm Shift in the investment industry. Let’s simplify by saying that different types of tokens, such as asset, utility or currency tokens type can be used. Generally speaking, “Asset token” called as well “Security token” is Tricky to put in place legally speaking as it is disrupting the well-established IPO (Initial Public offering) regulation in place.
6) Platform & Framework
Finding if the project is to be implemented on a “public” or “private” blockchain will be linked as well on which development Frameworks/Platform is best suited for the project. In certain cases, a completely new platform must be developed.
7) Project roadmap
A blockchain project is based on resolving a defined user pain points. This is followed by business ecosystem design, which is the basis for defining the token economics. This will form the roadmap with milestones used as baseline for the ICO whitepaper if there is financing requirements.
The digital age is upon us and while the disruptive impact of challenger banks or mobile payment systems is great, we see four critical takeaways:
- Customer focus as Amazon, Tencent, Revolut or N26 will not go away, so learn from it or risk losing your customers.
- Mobile payment/banking and the move from Fiat to Crypto will be a very small step.
- Blockchain is just around the corner and the impact on tech infrastructure must be reviewed just as the internet changed the tech world
- Finally, companies need to understand and initiate a cultural change to be more adaptive.