Smart contracts and their role in the corporate world Pt. 2
Smart contracts can additionally assist in enhancing financial services, which consists of loans and mortgages. To do this, it can link the entities and make sure that the entire process can be finished in a zero-friction manner. Further, it additionally furnishes an error-free process. For example, the smart contract set up to manage a mortgage can handle it by tracking the payments and releasing the property when the cumulative loan is settled.
An additional advantage conferred by smart contracts is the provision of visibility to all the invested parties.
- Financial Data Recording
Financial data is truly critical for any enterprise. And this precisely where smart contracts enter the picture. The furnish the necessary methods to data records for a more precise and transparent financial data collection. With smart contracts, it is simple to handle the uniform recording of information throughout an organization having the outcome of minimized auditing expenses and reporting.
Lastly, it also has the outcome of minimize accounting costs and improved interoperability within legacy networks and distributed ledger networks.
Use Cases – By Industry
The industries that are most eagerly looking forward to smart contracts proliferation are insurance, banking, and government.
Governmental contracts should be a straightforward, cut-and-dry thing, right? Think again. These apparently straightforward governmental contracts have the potential to get dragged down in multiple layers of classification and approval. Paperwork and administrative procedures can be streamlined and made accessible for a much more straightforward approval cycle. With regards to these variants of projects, the approval chain can be coded directly into the smart contract.
As signees obtain the contract, they can approve or upload relevant paperwork needed for contingency situations, like supporting proof documents, images, or blueprints. With all of these located at a singular location, rather than being located in email chains or several copies of physical printouts, all parties can always verify the approval status to make sure that a precise and updated status is maintained.
The international market for blockchain within insurance is predicted to appreciate to $1.39 billion in a couple of years time from now, with a CAGR of 85%. Smart contracts can enhance insurance procedures through automation of claims when specific scenarios take place. For instance,
- AXA has put out an insurance product Fizzy that leverages smart contract technology to manage flight delay insurance claims. The smart contract is linked to international air traffic databases so that when a delay in excess of a couple of hours, payment is instantaneously triggered.
- B3i is an enterprise furnishing insurance solutions within a blockchain platform furnishing prospects for efficiency, growth, and quality throughout the value chain. They leverage smart contracts to authenticate conditions. If it is authenticated automatically determines the asset as a candidate.
Although smart contracts fall under the umbrella term of emergent and disruptive technologies that holds the potential to alter the way insurers operate, it’s not the only digital technology insurers are harnessing these days.
Auto insurance contracts consist of several clauses and rules that correlate to particular scenarios and incidents. For ex., if a driver goes through a traumatic event like an accident, the blockchain can brute force its way the individual necessities of the smart contract while remaining transparent to all entities. The police report combined with any required imagery can be uploaded to the smart contracts to jumpstart the procedure. The adjuster can survey the damage and evaluate repair expenses.
The other party’s insurance data can be populated to ensure correct notification. All of this develops a simple-to-carry out process in tough scenarios. Beyond moving the process along in a more efficient manner, it turns into a singular source of truth when dealing with the insurance company for other entities that were a part of the incident. That precision is specifically critical when records are disputed, misplaced, or lost, so for all of the advantages of smart contracts, that solace is probably the biggest advantage as far as the insurance industry is concerned.
Mortgages are one of the most complicated contracts individuals have ever partaken in, and they’re also one of the most typical. As it has customer involvement and not professionals that manage contracts on a daily basis in the commissioning of their everyday professional duties, (such as supply chain managers), the intricacy of these contracts can be a lot to take. Smart contracts streamline the procedure, making it more tolerable and guided.
An obvious example of this for mortgages is the manner in which some contracts need inspections on the smart contract, which then takes the contract forward. Then when the purchaser obtains insurance, the provider transmits proof to the bank and fulfils that phase to shift it even further ahead towards closing. With several parties involved, the smart contract furnishes real-time status and transparency when every phase concludes.
Smart contracts are a huge facilitator of automation. It can assist the state in operations management. One of these operations consists of land title recording where the state can harness to carry out property transfers.
Land Title Recording needs parties to transfer property with effectiveness, efficiency, and transparency. Smart contracts can assist in doing so. Additionally, harnessing it will minimize auditing expenses and also enhance transparent within the entire system.
Another use-case for the state, which includes digitized elections, the digital identity that we just spoke about, and digital record filing.
- Supply Chain Management
This domain is ripe for enhancement by blockchain. Through the deployment of smart contracts, the supply chain can be enhanced manifold. For instance, it can be harnessed to track stuff within the supply chain with complete visibility and transparency. An organization can leverage smart-contract-driven supply chain and enhance its inventory tracking to a granular level.
It additionally enhances other aspects of the enterprise, which are directly linked with the supply chain. Further, harnessing smart contracts also implies a reduction in verification and improved tracing outcomes in reduced frauds and theft. Further, to make it functional, the institutions are required to include extra equipment, which includes sensors, to their supply chain. Further, it’s a smart contract application instance.
- Healthcare (Clinical Trials)
Clinical trials can also benefit from smart contracts as they can enhance cross-institutional visibility. It can additionally go about automating the data sharing amongst institutions, owing to the automation and privacy-maintaining computations it can perform. This is one of the real-world instances of smart contracts.
Further, smart contracts can additionally be harnessed to go about automating the trials and share the data throughout industry. To be accurate, it can assist with regards to identity, authorization, and authentication of the data.
The final use case we are going to speak about is escrow. Escrows are the process of recording value amongst the parties when the contract is still active. For this, the action is undertaken by the player to put out the funds.
There are several enterprises leveraging smart contracts for this reason.
- Documentation storage
Smart contract databases can be harnessed to document data and additionally perform digitization of real-world assets. You can harness a smart contract database to document the records and renew them and put them out according to the established parameters. All of this can be executed automatically. This is one of the real-world instances o smart contracts in action.
- Trading Activities
An additional use case of smart contracts within trade finance is trading activities. In this scenario, the middle man or broker is done away with, and his work undergoes automation with the smart contract. This does away with the extra cost associated with them. There are several enterprises leveraging smart contracts for this reason.
Smart contracts can be efficiently leveraged in the mortgage system. It facilitates mortgages to undergo automation and impart peace of mind and convenience to both the owner and buyer alike. For all of this to sync up, smart contracts are required to be coded based on the mortgage agreement. Once completed, the smart contracts can be put into motion, and every step in the procedure can be automatically executed. The entire procedure is quick, cheap, and simple. This is one of the ideal instances of the real world instances of smart contracts.
The Future of Smart Contracts / Conclusion
What we’ve observed thus far is not the entire scope of the blockchain, and particularly, smart contracts. These restrictions can be taken to their limits. The transactions can possess more depth than merely being logic-based.
Smart contracts carry with em’ a plethora of advantages. Chief among them is the deployment of contracts in real-time, without the requirement for legal representation. Due to their presence on the blockchain, they can be programmed in such a manner that if event B happens, C event should take place. For example, when a commodity reaches a specific low, beyond which the owner is not willing to let it go – it could be coded in the contract that it should be sold at that point.
Similarly, buy, trade, sell instructions would be coded into the blockchain to facilitate several actions with no need for a middleman, a lawyer and very minimal scope for human error. Smart contracts are the paradigm shift in the business world, with blockchain driving this dynamic technology which can provide a world of convenience for enterprises the world over. It’s near instantaneous nature of fulfilment, coupled with the reduced resources required for the middle man – makes it the swiss army knife of the business world. It’s potentials are endless, and in this blog article by AICorespot, you saw some of the applications.