An experiment conducted by Australia’s national science agency and one of the country’s ‘big four’ banks has concluded blockchain technology could save the nation hundreds of millions of dollars on one of its largest welfare schemes.
The CSIRO and Commonwealth Bank found a new type of smart money, powered by blockchain, could be used to help manage insurance payouts for users of the National Disability Insurance scheme (NDIS).
The technology was trialled with 10 participants and carers in the scheme using a prototype app, which aims to give participants more choice and control over their disability support services, while cutting administration costs, removing paperwork and reducing the risk of fraud or accidental misspending.
The NDIS prototype app aimed to test the functionality of smart money enabled by a blockchain token solution that could integrate with Australia’s New Payments Platform, which are new technology developments that have progressed considerably since the NDIS was first envisaged in 2011.
“This has been an important research project for understanding the benefits and limitations of blockchain technology in the context of conditional payment environments, such as the NDIS,” Dr Mark Staples, Senior Principal Researcher in the Software and Computational Systems program at CSIRO’s Data61, said.
“Our use of blockchain added new kinds of programmable behaviours to the smart money in the prototype system. This automation and flexibility could reduce friction and enable greater innovation in many payment environments and unlock network-effect benefits.
“This could include more directly connecting citizens to public policy programs, empowering people to optimise their spending through things like smart savings plans and smart diets, and reducing costs for businesses, including through the potential for self-taxing transactions.”
The prototype app was tested by 10 NDIS participants and carers in the CommBank Innovation Lab as well as a small number of medium-sized disability service providers.
Participants and carers estimated that the prototype app could save them one hour to 15 hours per week, while service providers estimated potential annual cost savings as a percentage of revenue of 0.3 per cent to 0.8 per cent.
CBA modelling indicates that – even if these estimates were applied conservatively across the NDIS ecosystem – the economic benefits would equate to hundreds of millions of dollars annually, if the proof of concept was developed and implemented as part of a full-scale solution across Australia.
“We’re excited by the potential to enable NDIS participants to exercise greater choice and control over their disability support services, while streamlining budget management and removing the need for paperwork,” Commonwealth Bank’s Head of Government and ADIs Julie Hunter said.
“The results also show potential to reduce administration costs for disability service providers and the risk of fraud and accidental misspending.
“The trial has also highlighted that the technology could have wide application across the government, business and not-for-profit sectors.
“We look forward to exploring these opportunities with our partners and clients across Australia.”
The Commonwealth Bank is using the Ethereum blockchain for bond transactions. Read more here.