This write up makes up part two in a four part series of articles. In this series, cryptocurrency is a secondary thought when compared to the real world application of blockchain.
Part one (https://xrpcommunity.blog/blockchainintherealworldpt1/) looked at the top 20 companies in the Fortune 500 focusing on America. Continuing the theme, this article will look at experiments and applications by the top 20 companies in the FTSE 100 and the United Kingdom.
- Royal Dutch Shell
In November 2017, a consortium of energy companies led by Royal Dutch Shell and British Petroleum came together to develop a blockchain based energy commodities platform which was at the time expected to begin trading by the end of 2018. (1)
The initiative has a major advocate in the form of Mercuria, a global energy and commodity group. In an interview with the Financial Times, the CEO of Mercuria, Marco Dunand discussed the companies profitability as well as discussed some prototype oil trades and described the tech as "one of the biggest breakthroughs in the energy trading industry with more efficiencies including the movement of documentation in cross border exports in a faster and more secure manner" (2)
The platform, called "Vakt", launched in November 2018. It is not specifically for the trade element itself, more for the management of the trade and delivery of physical energy in the supply chain. Clever stuff. (3)(4)
The above however was not Shell's only foray into blockchain. Earlier this year, Shell acquired a minority stake in a startup called Applied Blockchain based out of Canary Wharf in London's Dockland area. (5) That acquisition bore fruit last month with the first derivative trades taking place for Shell on one of Applied Blockchain's solutions. (6)
The CEO of Shell Ben van Beurden (An ex client of mine a couple of years ago funny enough!) said "Last week we did the first product derivative trade on blockchain together with our partner Applied Blockchain and this is just one example of how technology can completely revolutionise something that has been a very traditional business for a long time already" (7)
- British Petroleum (BP)
Aside from the platform mentioned already under Shell in which BP are a partner, I could not find anything further which BP are pioneering themselves. That said, the Vakt platform is significant and the resources being committed by participants are substantial so this is not a surprise.
As mentioned in part one of this article series, big pharma could be a major field in which blockchain solutions to track and trace drugs would be extremely beneficial. GSK as the UK's largest pharma company have jumped on the bandwagon with Viant, a company and project with the backing of Consensys . Using an Ethereum based chain, GSK and Viant are looking at multiple uses including what seems at first a slightly unusual approach to track the use of licensed technologies.
On second consideration however, Blockchain would work well here not just for one set of licensed tech, but multiple simultaneously in order to ensure users are indeed who they say they are and have that checked in real time. In a world where software piracy exists even today, it is yet another arena where blockchain application makes a hell of a lot of sense. The application here though is not specifically software, but combating counterfeit drugs. (8)
The problem of counterfeit drugs is both serious and growing globally. Statistics are both huge and varied but just a few examples of the scale of the issue are as follows:
- In 2012 near Boston USA, tainted steroids killed 11 people and sickened another 100.
- According to the World Health Organisation, as high as 64% of ant-malaria drugs imported into Nigeria were fake. Over 70% of drugs in Nigeria were imported from India and China, both considered to be the worlds largest source of counterfeit medicines
- In late January 2012, fake medicines claimed the lives of over 100 heart patients in Lahore, Pakistan at the Punjab Institute of Cardiology.
- On August 21, 2005, the U.S. Attorney’s Office for the Western District of Missouri issued a press release announcing that three businesses and eleven individuals were indicted for their involvement in a $42 million conspiracy to sell counterfeit, smuggled and misbranded Lipitor and other drugs and for participating in a conspiracy to sell stolen drugs. As part of this investigation, FDA initiated a recall of more than 18 million Lipitor tablets, which ranks as the largest recall in the history of criminal investigations of counterfeit medications.
Another major biopharmaceutical company, Astrazeneca is an Anglo-Swiss company employing around 6'500 people. Whilst not as large as Glaxo, its presence in the pharmaceuticals market is significant with its primary UK relationship being with the National Health Service. The company also has internal drivers utilising internet of things hardware, as well as augmented reality.
Those internal drivers come from an entire department Astrazeneca has labelled its "incubation lab". A focal point where "innovation architects" and "innovation designers" are looking not only at blockchain, but the long term promise of quantum computing as well, both with an eye on solving real world problems for Astrazeneca within their own business model. (35)
Outside of the incubation lab and within the more senior areas of the company. Astrazeneca CIO David Smoley recently confirmed the company are looking at blockchain technology to open opportunities in "asset tracking and fraud detection" (36)
Initial research on Diageo has come up a little short. Whilst Diageo CTO Manish Gupta attended the Blockchain Summit Singapore this year and was part of a panel discussion(37), there is little information out there about Diageo going down the blockchain route in the public domain that I have been able to track down.
- British American Tobacco
Another company partnering with the blockchain spearhead that is IBM with one goal and one goal alone: save costs. As a company that ships over 660 billion cigarettes annually and coming from an ex smoker, I am not sure how I feel about this personally...but I digress.
IBM has implemented a new blockchain based SAP template on behalf of British American Tobacco in more than 180 markets world wide (11). The headline stats are as follows:
- 30% greater treasury gains versus the business case across British American Tobacco
- 50% Profit and Loss improvement versus business case in Asia Pacific
- 30% stronger balance sheet versus business case in Asia-Pacific
- Banco Santander
Likely needing absolutely no introduction to the majority of those reading this article, Santander's preferred blockchain partners are Ripple. With multiple advances in their global payments systems using Ripples Xcurrent and user benefits including facilitation of apple pay and touch ID, not to mention the well publicised OnePayFX running on Ripplenet, payments are already being sent with distributed ledger technology being the backbone of delivery of those payments. (12)
I wont spend much time here as I am aware the company and subject is already well researched and understood in its partnership with Ripple by most reading here. I shall leave the Xrapid speculation where it belongs for now: firmly in the speculation box!
Unilever's first foray into blockchain is centred around a global agriculture that I myself could not live without being a Brit... Tea! At the One Planet Summit in Boulogne-Billancourt, France in December 2017, Unilever announced it was moving forward with an ambitious blockchain program that bought together multiple stakeholders including BNP Paribas, Sainsburys, Barclays, Standard Chartered and multiple tech start ups to track and verify contracts for farmers in Malawi supplying tea to Unilever and Sainsburys. (13)
Whilst the initiative doesn't sound like a huge program, its reach and impact are very real. The program encompasses over 10'000 farmers with a goal that aims to offer preferential prices to those farms pursuing sustainable methods of farming. The project forms part of Unilevers plan to ultimately source all its agricultural products through sustainable farming.
The above however is just one of multiple blockchain projects Unilever are partaking or experimenting in worldwide:
- In July this year, reports emerged of Unilever backing a program to provide greater transparency and data verification out of Singapore. The project was a response to GDPR in Europe but Unilever looked at a far broader roll out. (14)
- In February, Unilever's Chief Marketing Officer Keith Weed announced they had enlisted IBM iX, to create a digital ad supply chain solution for media buyers that would revolutionise media platforms. (15)
- Unilever also joined the Foodsafe Initiative powered by IBM (mentioned in part one of this article under Walmart). (16)
- Rio Tinto
Rio Tinto is not a well known name in the public eye. Unless you are either a trader, investor or in the mining industry, you might not even know this company exists. Let alone that it is an Anglo-Australian company worth over $40 billion and is one of the worlds largest metal and mining corporations.
In December this year through BNP Paribas and HSBC Singapore, the first deal involving Iron ore mined by Rio Tinto was transacted fully digitised and end to end trade between two companies completed. Everything from the Letter of Credit (LC) to the Electronic Bill of Lading (eBL) was completed on R3's Corda Blockchain.
- Reckitt Benckiser Group
Another company which may not immediately ring any bells with the majority of public, but there is a good chance everyone reading this article has used some of their products. Similar to Unilever or Proctor & Gamble, Reckitt Benckiser Group have a large portfolio of fast moving consumer goods including Nurofen, Strepsils, Lysol, Harpic, Durex, Dettol, Vanish and many more. Worth around £11.5 billion sterling at the back end of 2017, they are a powerhouse in the FMCG industry. (24)
In late 2017, Reckitt Benckiser joined Mars and Unilever adding their products to a new digital platform which enables them to bypass supermarkets and other retailers to sell directly to the consumer. The new platform, developed by technology firm INS has the potential to save up to 30% for manufacturers and frees them up to not have to negotiate with supermarkets. Moreover, the platform being blockchain based offers an extraordinary amount of data capture for manufacturers getting them into the retails space direct to consumer faster than competing with retailers. (23)
- Vodafone Group
Vodafone have been quiet on the blockchain scene. Up until recently having no more than a couple of blog pieces on their website from senior members of their security teams.
That changed on the 18th of December. The European Standards Group for IT (known as ETSI) announced a new group that would focus on permissioned ledgers/private blockchains. The groups objective is to work on "challenges related to the DLT, business use cases, functional architecture and solutions for the operation of permissioned distributed ledgers".
Glencore are a major player in both the mining and energy industry as well as some presence in agriculture with operations around the world, most notably in Africa and Latin America. (17)
In September this year, Glencore were one of fifteen global players including banks, energy companies, trading companies and more who came together to form and launch Komogo SA. A digital trading platform based on blockchain, Komogo SA is already live. Cleverly, Komogo SA was created to compliment Vakt. (18) Vakt was designed to focus on post trade processes and the management/delivery of that process, Komogo compliments that by taking the blockchain upstream in that process to facilitate the trade itself. Its a match made in heaven. Combined, these two platforms have the potential to radically change the energy commodities market and the industry as a whole by offering as yet untapped efficiencies and cost saving solutions.
Whilst unconfirmed, the development of Komogo likely comes as a result of Shell's participation in both programs and being the largest player in the consortium.
Shire pitch themselves as "the worlds largest biotech company focusing on rare diseases". A young company, formed just over 30 years ago in 1986, they made some early breakthroughs in Alzheimer's research and end stage renal failure that set the basis for their growth to becoming the giant they are today. Currently, they are in the early stages of being purchased by Takeda Pharmaceuticals at a price of $59billion which was agreed by shareholders from both companies late this year. Founded in the UK, Shire has 24'000 employees in 65 countries with its current headquarters in Dublin. (19)
In October this year, Shire joined a partnership as co-chair that is spearheaded by the former mobile phone company Blackberry aimed at storing and sharing medical data under set conditions (whether public, private, with full data or anonymously). The exciting part of this program entails that data may even be input by internet of things biometric devices.(20)
As the fourth largest insurance company in the world and the largest in the UK (21) Prudential is an absolute behemoth with a revenue of over £85billion in 2017 (22)
In mid November 2017, Prudential teamed up with StarHub, one of the top three telcos out of Singapore to launch a blockchain based platform for small to medium sized enterprises. The platform, called Fast Track Trade was designed as a connectivity hub for businesses offering a plethora of services, the ability to transact on the platform itself and of course, purchase insurance.
Developed by a fintech startup called Cites Gestion, the funding for its development came from Prudential themselves, demonstrating the companies commitment to both expanding their business but also their belief in the technology itself. (25)
This belief is being represented in a very public way at the Blockchain Expo Global 2019 at Olympia Grand in London next year where Prudential are one of the expos sponsoring partners. (26)
Further exploration of blockchain by Prudential actually has veered into cryptocurrency with Gibraltar Ventures (the venture capital arm of Prudential) being a major backer of the Digital Currency Group.(27) If that sounds familiar, its because it should do. DCG are virtually the largest player in the cryptocurrency industry with investment stakes in a large number of crypto companies, news publications and exchanges. (28)
- Lloyd's Banking Group
In July 2017, Lloyd's were one of 27 banks taking part in a blockchain/ Proof of Concept project being pushed by Swift. The project aimed for real time reconciliation of payments going cross border with respect to nostro accounts held foreign financial institutions. (40)
There are somewhat conflicting reports in March 2018 when the experiment came to its conclusion with some reports out of Swift labelling the project successful and others from Swift to mainstream financial media saying blockchain needs a lot of work before it is ready for adoption (41). Whatever the case, it would appear since that time Swift have (at least in public) ceased pursuit of blockchain or distributed ledger technology as a solution to update their own payment systems.
Since this episode, in the public space, Lloyd's do not seem to have taken part in further experiments with blockchain...for now.
Relx is a British multinational information and analytics company catering to four main markets: scientific, technical and medical; risk and business analytics; legal; and exhibitions.
Information on Relx as a parent company using blockchain is scant, however RELX are majority holders in Accuity, a software compliance provider who are making an interesting foray into blockchain partnering with R3. (44)
The project aims to screen financial crimes using Corda (R3's distributed ledger platform) without having to exit the platform itself. In todays world of forensic accounting, manually examining transactions outside a platform is a necessary and time consuming process. Accuity are working with R3 to elimnate or highly speed up this process by making use of the banking clients R3 already have on their books.
Accuity have also confirmed they are working with Ethereum and Hyperledger as well. Could this be another example of Berkshire Hathaway subsidiary companies progressing before the parent? Perhaps even feeding the technology upstream to the parent company? Time will tell.
- BHP Group
The largest mining company in the world, whilst listed on the London Stock Exchange is actually an Anglo-Australian company headquartered in Melbourne, Australia. With a revenue of close to $45billion in 2018 alone and 62'000 employees globally, BHP is definitely under the "whale" category!
Over two years ago in September 2016, BHP Billiton announced at the second annual Global Blockchain Summit that it would use the Ethereum blockchain to improve its supply chain processes, specifically for rock and fluid sample.(42) The partnership began with developments through Consensys and Blockapps, until this point, processes were not even recorded on databases...they were on spreadsheets!
Evidence of this not being just a fad came in March this year after 18 months of operation when Joe Lubin (Co-Founder of Ethereum) talked about the project saying: “Blockchain is better than other systems because all the different actors can be certain that they’re seeing accurate data in real time. BHP itself at the home office, the rig, the transportation company, the custodial company, and the government can all be on the same system, seeing things in real-time.”
- National Grid
In late 2017, a tech startup in London named Electron was awarded funding from the UK government to prove how blockchain could transform the market for balancing the national electricity grid. Their application was supported by both Siemens and National grid. (38)
Early on, the growth of the platform has seen both National Grid and Siemens join as consortium partners in a program which has been dubbed the development of an "energy eBay". Since then the uphill task of convincing providers to climb on board has begun to pay off. Nine new partners joined the consortium in Feb 2018 including (39):
- Northern Powergrid
- EDF Energy
- UK Power Networks
- Open Energi
- Kiwi Power
This project whilst still in early stages of what it seeks to achieve has come a long way from its beginnings as a government funded initiative and looks like one of the more promising energy blockchain initiatives.
Needing no introduction in the UK and likely very little even outside the UK, Barclays are the fourth largest bank in the UK but possibly the best known by brand. (32)
In July 2018 Barclays filed two patent applications with with U.S Patent office with two very different purposes. The first of these was a run of the mill blockchain powered KYC solution. (33) Whilst this is nothing to really scream about, it does stand as a very "safe" option compared to the second patent they filed.
That second patent filing related to a blockchain platform to accelerate cryptocurrency transfers. (34) Coming from a traditional British bank, whilst perhaps not entirely surprising, this is a bold move on Barclays part if they choose to follow through with the platform instead of simply filing the patent. Time will tell of course, but it is worth noting that as a Brit myself, I have noticed Barclays certainly do seem to be the most receptive to digital assets within a commercial and global framework when compared to other UK banks.
- Royal Bank of Scotland Group
RBS has something of a chequered history and certainly in recent years is not exactly revered by the British public after being rescued through tax payer money in the aftermath of the 2008 financial crisis. That said, the company, headquartered out Edinburgh in Scotland employs over 70'000 people and continues to be one of the largest financial institutions in the United Kingdom.(29)
In July 2018, RBS joined a consortium of banks collaborating to get trade finance on a blockchain in a measure designed to save costs. (30)
The platform, called TradeIX - Marco Polo is a joint project from R3 and TradeIX and has a list of financial institutions that read like a who's who of global banking, including (but not limited to):
- BNP Paribas
- Standard Chartered
- Wells Fargo
- Bangkok Bank
It typically takes between five and ten days to exchange a letter of credit, but this can be reduced to 24 hours through the blockchain. The distributed ledger enables all parties to see updates made to the documents, which is easier than old-fashioned paper copies. (31)
When I started writing this piece, I honestly believed the American market would be the driving force in the exploration and adoption of blockchain. In hindsight, not only was that somewhat short sighted, but that notion loses track of what blockchain is about. Due to its immutable nature and distributed structure, borders mean nothing.
Several UK based companies that have global operations are exploring the blockchain both in domestic and foreign markets at a scale that is more than just significant, it's downright impressive. What is more interesting though is blockchain is allowing competitors to come together within industry to create efficiencies without losing their competitive advantage or divulging trade secrets as evident particularly in the energy sector. That is truly remarkable.
Part three of this collection of articles moves into the heart of trading in Europe where I take a look at the top 20 companies in the German Dax.
To Be Continued...