A taste of today´s technology

In blockchain we (will increasingly) trust

I

The advisory firm, Deloitte, has published a well-reasoned piece of research on the applicability to the commercial real estate market of blockchain technology.  The research focuses on the possible benefits in the leasing and associated management process.  The material suggests to me that there are a number of places in the process where blockchain can create efficiencies and eliminate friction.  And with that, take out cost.  It’s early days yet for real estate companies so Deloitte advocates a partnering approach to facilitate learning but advises these companies to avoid it at their peril.   They provide a number of reasons to consider use of blockchain in real-estate leasing:

  • Need for a common database
  • Multiple entities can modify database
  • Lack of trust among entities
  • Opportunity for disintermediation
  • Transaction dependence

The procurement person in me immediately honed in on the opportunity for disintermediation as my experience is that this usually correlates quite nicely to lower total costs.

Deloitte also provide their view of which steps in a typical leasing process lend themselves to use of blockchain:

  • Property search
  • Pre-lease due diligence
  • Lease agreement establishment through smart contracts
  • Automated payments and cash flow management using the smart contract
  • Real time data analysis

Each of these steps have actors adding to the cost stack of the end-to-end transaction. I am going through the process of leasing a new property and there are many, many parties involved in making it happen between me and the property owner.  Whilst mine is not a commercial transaction, it’s similar enough to be relevant.  I can attest that we are still handling these transactions in a manner that Charles Dickens would probably recognise.

Intermediary actors such as brokers, agents, notaries, etc., would have their services rendered mostly unnecessary were blockchain to be adopted.  Without them, commercial real estate firms will improve their costs.  I’d be very interested in that extra margin in my should-cost calculations.

Blockchain is going to have an impact in any sector where trust is a factor.  It will make many paper-based transactions frictionless and dispense with the need for intermediaries to lubricate the process.  It behooves the thinking category lead to do a little digging into blockchain and its potential impact upon the spend category, what plans suppliers have to trial its use, and then to model the cost intermediaries add to the transaction.  As Deloitte advises:

Think about it, question it, but don’t ignore it

About the author

Michelle

I buy technology. I am curious about how technology has changed, and its impact in the workplace and upon society. I also like street art. And dachshunds. Especially dachshunds.

A taste of today´s technology

Meta