EduChain: Validating your educational identity
Blockchain is fast becoming more than just a buzzword. As organisations continue to educate themselves on the technology and its capabilities, the number of potential use cases where blockchain can play a real and disruptive role is rising. With bitcoin cryptocurrency as the first use case, the main focus has been on the financial services industry; particularly around payment, capital markets, lending, and regulatory reporting. However, there has been a recent shift to looking beyond these use cases and identifying other areas or processes across industries where blockchain would have an impact. One such area is education qualifications.
Deloitte's EMEA Blockchain Center of Excellence based in Dublin has developed a blockchain solution around the collection, validation, secure storage, and sharing of education qualifications. This increases the efficiency of the onboarding process of new employees along with tracking the continuous development of employees across the organisation. This platform was originally designed to address a regulatory requirement within the financial sector, and can be leveraged across industries, sectors, and geographies to manage qualification requirements of all potential and existing employees.
Identifying the use case
Regulatory compliance is a key focus area and pain point within the financial services industry. Over the past number of years, increased regulatory pressure and related fines have had a major impact on the industry, resulting in a reshape of strategy and investment focus in many organisations. Several use cases have previously been explored around regulatory reporting and the ways in which blockchain can be used to improve the efficiency and minimise the effort in this process. Deloitte was approached by our client who was searching for a more efficient and innovative approach to handling one such regulatory requirement in Ireland-the Minimum Competency Code (MCC).
The Minimum Competency Code (MCC) is a directive issued by the Central Bank of Ireland, effective from 1 December 2011. The code sets down the minimum standard of competence required of persons carrying out certain functions regarding financial products, particularly around providing financial advice to customers. Each staff member in a role under the MCC scope must have a validated qualification from the Institute of Bankers and additionally must carry out and log 15 hours of continuous professional development activities on an annual basis. Failure to do so can result in a membership being revoked, as the person would not be legally qualified to carry out this role. This carries huge repercussions for the financial institution and there are regulatory penalties in place for failure to comply with the MCC code.
The existing MCC process within our client’s organisation is a completely manual process with reliance on data stored in static spreadsheets, passed around the organisation and validated by 10 internal teams. Each request, update, or amendment made to the data requires the manual and time-consuming process of merging, updating, extracting, and maintaining the data. The process also carries a large regulatory risk and there is currently no single view of the MCC status within the organisation.
Developing a secure shared data platform would allow for the automated extraction and access of data from multiple independent organisations. However, a key difficulty with developing and implementing this solution revolves around companies and organisations trusting that their sensitive data will be secured, maintained, and available in the appropriate and reliable manner.
Where blockchain fits
Blockchain is a disruptive technology that provides the capability for multiple users to securely share information through a distributed ledger without the need for any central database maintenance or management. Specific blockchain characteristics enable the realization of concrete use cases, leveraging three core applications:
- Immutable data storage – decentralized consensus to track and store information
- Value Exchange – transactions among peers within a network
- Smart contracts - distributed workflow and automatic execution of pre-written logic
A valuable example could be where a university may simply assign a qualification to a user’s identity that can be accessed and shared as necessary and is globally available, thereby eliminating the need for independently verifying qualifications with the host organisation. The data written to this common platform is digitally signed and encrypted.
Using blockchain technology in this manner to deliver the secure sharing of data across multiple organisations, where the data is fully authenticated through the organisations’ private key has not been attempted before. Blockchain was identified as a good fit for this MCC process, as it provides:
- An immutable, trusted source of information, to ensure the accuracy of the certificate issued
- Permissioned access and visibility of the stored data to multiple internal and external parties and user groups
- Ease of integration with multiple systems and data sources
- Scalability and catering for multiple types of data, beyond certificates
In this scenario, multiple organisations could access certifications in real time, where the data may be segregated into multiple secured compartments by implementing specific cryptography rules. This would allow for the seamless onboarding of multiple certification organisations.
However, the nature of the blockchain technology means that it will always be slower than interacting with centralized databases and is not designed for use on applications that require large-scale, real-time data access. For each transaction processed, a blockchain must perform all the same validations and checks as a regular database in addition to:
- Signature verification: Since transactions propagate between nodes in a peer-to-peer fashion, every blockchain transaction must be digitally signed using a public-private cryptography scheme. The generation and verification of these signatures is computationally complex, and represents significant challenges and technological uncertainties that must be overcome. By contrast, for centralized databases, once a connection is established, requests can flow over it with signature verification.
- Consensus mechanisms: In a distributed database such as a blockchain, it is necessary to ensure that nodes in the network reach consensus, which may involve significant back-and-forth communication and dealing with forks or rollbacks. In a centralized database dealing with conflicting or aborted transactions is much less frequent since transactions are queued and processed in a single location.
Supporting our client
From idea conception, Deloitte undertook a collaborative approach. The transfer of knowledge and exploration of the potential of blockchain within our client’s organisation was a focal point and a key deliverable. We developed an end-to-end solution, providing both technical and business expertise, mapping out the requirements and identifying the savings and improvements. Our technology team developed a functioning prototype, based on Ethereum code, including user interfaces for four different types of users.
As disruptive technologies accelerate, we must deliver projects with higher flexibility and agility. Deloitte approached this engagement using agile and SCRUM methodologies, which enables rapid collaboration, feedback, and iteration from our client to ensure the solution was fit for purpose. In order to truly embrace shared learning and knowledge transfer, the client team was co-located in Deloitte’s EMEA Blockchain Lab in order for the project team to really be involved in the development of the solution.
The solution impact
The output from the proof-of-concept (PoC) phase was a working demo prototype that proved the capability of blockchain to provide a viable and trusted solution to the tracking and tracing of education qualifications within the financial services industry. The use of blockchain in the MCC process enabled our client to have a single view of the organisation and also assure their compliance with the regulatory code. It showcased the dramatic reduction in man hours and manual input that was required in the process, which thereby would enable staff to spend more time focused on value added tasks within the organisation. It also alleviated the pain and the effort involved in onboarding new staff; improving the process for the HR function and improving the employee experience. Moreover, it provided a potential industry¬wide solution to the MCC process; creating a strengthened ecosystem in the financial services industry.
However, what was unique about this use case was the potential it has to be leveraged and replicated across industries and sectors. It provides a trusted way for organisations to ensure the validity of new staff qualifications and their ability to carry out their role. It also allows organisations to monitor the skillset of their staff, which can present opportunities for redeployment of capabilities. Finally, it provides employees with control over their qualifications as they can ensure the qualifications they receive are safely stored in one place, and with permission can share these qualifications as required.
This use case has opened up the conversation around where blockchain can play a role in transforming traditional business models and processes. In fact, the key lesson learned from this short effort is that when it comes to disruptive technologies and their potential impact, the sky is the limit.
We have also proved that traditional functions can unlock their ability to truly innovate and create new ways of working. As we move forward to the pilot stage, we will explore the legal, regulatory, and compliance considerations associated with blockchain platforms.
This article first appeared in edition 16 of Deloitte’s Inside Magazine. Access the full edition and other articles within it here.