Fraud is certainly a strong issue for most businesses in the world. However, a revolutionary technology like Blockchain can change things for the better. Those who are still struggling to deal with fraudsters and fraud in their business environment can take advantage of the benefits that blockchain provides in that regard.
Blockchain is a decentralized ledger that is quite difficult to manipulate. It only offers access to verified users to share, view, or store their digital information most securely. With such a security-enhanced environment, there is more transparency, accountability, and trust in business relationships. While blockchain may not work in some industries, many areas can benefit immensely from the security-rich environment of the platform. Let’s see how it can help reduce fraud in the Insurance sector, reduce identity fraud, and curb advertising fraud.
Several factors combine to make financial transactions a bit complicated and difficult to manage. There is third-party meditation, different currency denominations, time needed statements, and the need for collateral. All these factors give room for the perpetration of fraud in the industry.
Fraudsters generally take advantage of these multi-step processes with human interactions to commit fraud. However, blockchain provides an avenue to share information in real-time. It makes sure that all parties to the contract are available and present during the ledger update. The platform does minimize not only the propensity for fraud but also reduces cost and time.
With the proper implementation of blockchain technology, companies and organizations in the Insurance and Finance sector can hinder the activities of fraudsters. When you reduce the time to complete a transaction, all parties will receive their funds on time. And when the parties involved conclude their financial transactions on time, it will certainly block many loopholes for fraud.
In a recent development, Santiago Exchange in Chile has concluded arrangements to set up blockchain technology throughout the country’s finance industry. It says the main aim is to help minimize transaction processing times, reduce errors, and block several areas that are vulnerable to fraudsters.
Just last year alone, consumers lost about $16 billion due to theft and identity fraud. It’s a worrying development for consumers, and some stakeholders are already seeking for a more secure transaction solution. Blockchain technology can play a good role here, considering thee timely and completely secured platform. The blockchain framework secures information in a permission blockchain framework.
Securekey Technology in Canada is developing an attribute sharing and digital management platform using blockchain technology. This platform will help organizations to properly handle a customer’s information while the customer will have the right to control what they share. It will reduce the bottlenecks and the time it takes to verify transactions. Once the platform has made these possible, it will surely reduce the vulnerability in the system.
Identity fraud will see its end in the supply chain when transactions are not allowed if both parties in real-time do not verify them. That is what blockchain technology can offer. It is a reconciliatory platform which makes it very difficult for fraudsters to infiltrate. It will empower users in terms of what information they want to share.
Furthermore, as a permissible network, blockchain will be great for consumer protection. It means that no company is allowed to share your information if you’ve not granted them real-time permission. With the integration of blockchain technology into the system, fraudulent activities will reduce to the barest minimum.
Companies in the U.S lose about $40 billion to insurance fraud, according to an FBI Report. And the majority of these fraud incidents are via premium diversion. The effect on insurance consumers is the rise in annual insurance costs. But blockchain can provide a solution.
Recently, PwC reported that blockchain could do a lot more in the insurance industry. Blockchain can provide improved transparency in claims management. The transparency will reduce fraud incidents to a very large extent.
On a similar note, many insurance companies are already taking advantage of the security standard of blockchain technology. In 2017, companies like AIG, Swiss Re, and Allianz established a pilot program that uses Smart Contracts to pay for natural disaster claims. Since the Smart contract uses real-time data, it reduces the risk of fraudulent claims. Once the data capture the victims of the disaster, it becomes very difficult for others to file for fraudulent claims.
Advertising bots are causing a lot of harm in the advertising industry. About 30% of these adverts do not reach their target audience because of bots. And those responsible are cyber-criminals who hack computers through phishing techniques. Advertisement fraud is one of the most difficult frauds to detect. Worse is that it’s very simple to perpetrate.
However, with blockchain technology, organizations can prevent advertisement fraud in the industry due to its secured nature. AdEx has already employed the technology in its ad platform. It uses the platform to link genuine ad publishers to advertisers. With the platform, there is efficiency and improved transparency in the advertising industry. If other companies in the advert industry can deploy this blockchain platform for their peer-to-peer network, it will certainly reduce the incidence of fraud in the industry.
It’s highly unlikely to eliminate all frauds through blockchain. Even with the use of blockchain, fraud can still occur. But these thefts are not particularly linked to the blockchain platform. Although the platform has a decentralized framework, there may still be some vulnerability from the infrastructure. As a result, business organizations need to make use of the blockchain technology, particularly meant for their industry, using the proper infrastructure. Once the organization can control these layers of services on the blockchain network, it will stop or drastically reduce fraud.
Blockchain technology has shown its usefulness in a wide range of areas, including cost reduction, and timeliness. However, it may be in fraud prevention that its usefulness will be fully recognized. The decentralized platform is built to provide a completely secured network in many industries. We have mentioned a few of the industries here, but blockchain can combat fraudulent activities in a wide range of industries, as well.
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