Despite being shaken by the crashing waves of political uncertainties, London continues to secure its ranking as the world’s number one financial centre. New York follows closely at The City’s heels, while Hong Kong and Singapore come in at 3rd and 4rth place, according to the Global Financial Centre’s Index. The UK has also seen nearly five times the number of FinTech deals financed in 2018 than its closest European runner up in the domain, Germany. London’s world-class financial hub continues to float with flying colors – highlighting the need for competing financial hubs to invest in digital infrastructure.
But the real measure of a nations’ long-term economic and technological capabilities spreads much further than the world of finance.
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, wrote in a report on the Global Agenda of the Fourth Industrial Revolution: “in its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.
“We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.”
London’s reputation as a leading financial hub may be common knowledge, but less well known is what the country is doing to foster technological innovation across social sectors.
How are governments responding to the challenges ahead of adapting societies to technological change? What are the biggest obstacles to technological innovation? And what are the metrics for spotting a blockchain start-up with real potential to benefit wider society? Jonny Voon, Innovation Lead of the UK’s innovation agency, InnovateUK, offers a sneak peak into some of the behind-the-scenes workings of the government funded scheme to bring the best ideas in the blockchain and tech space to fruition.
The non-departmental public body aims to drive productivity and economic growth and is funded by a UK government grant-in-aid. Key criteria for selecting projects worthy of funding, says Voon, is that the use case and opportunity is long-term and deeply rooted in societal and cultural changes.
“In industries like creative industries, health, or energy and transport, there is a need for blockchain, but the use case or the industry is nowhere near adopting it.
“So, we look at what can we do to build a use case that can eventually be taken through to, say the NHS, and say; look we’ve done research, this shows the technology can do this, would you be interested in taking this to the next step?
Voon says start-ups need a robust business plan, a solid understanding of the market, the potential risks of the project, and how these can be mitigated.
“Too many people tell us ‘We want to develop a blockchain solution’, but we ask, ‘which industries’ and ‘why?’”
“We ask a lot of questions and we try and find out a lot about them.”
Blockchain start-up ideas supported by InnovateUK
Alice Si is a blockchain start-up which aims to bring significant transformation to the Third Sector through a project with Imperial College London called “GIVE”, which Voon says “has great social applications, and cultural ramifications.
GIVE could help to formalise and put some technology around giving to charities that would allow people to measure how their money is helping to achieve the desired results.
“Linking charitable giving to metrics and KPIs and being able to formalise that, means that in theory we should get a better idea which charities are performing,” he says.
Voon says this would also allow corporate investors to report back to their shareholders why they are giving to a charity and what their funding is enabling in real terms.
“So, let’s say you’re a corporate and you donate £1 million each year to charities. Your shareholders go, great, but why those charities? How well are those charities performing?
“You wouldn’t know how to answer.
“What if smart contracts and the blockchain allow you to say, yes, we’ve verified that our £1 million has gone to them because they’ve met key targets and metrics.
“That has potential to overwhelmingly transform the way we give to charities and that will have an ongoing and long-term effect on our society and our culture and economy,” says Voon.
Voon points to digital security as another example of a sector Innovate UK has been looking to boost through funding start-up Metrarc’s R&D project Blockchain device Metric ENhanced Security, or “IMmENSe”.
The company has developed novel mechanisms to authenticate and authorise data using the blockchain and ICmetrics – traits surrounding technology, such as runtime of the CPU, the battery, or screen brightness. These can be used to identify and secure a particular device and node: the ICmetrics create a digital fingerprint that can be used to generate an encryption key specific to the device.
This can help to prevent a blockchain networks’ security from being compromised: “blockchain relies on nodes for consensus, but what happens if they’ve been corrupted or compromised?
“Now that won’t work on a huge network. But if you take a private network, where you have a dozen or half a dozen nodes, what would happen if that node is compromised and someone is now trying to change the validity of the data and the transaction?
“The problem is that once that data is on the blockchain – authenticated and validated – it’s there and it’s seen as the truth. If you can change the first (genesis) block, everything else is going to go wrong,” Voon explains.
But with ICmetrics, “you can authenticate that that node is valid, and should there be any discrepancies with its encryption key, the node can be blocked from the network and not allowed to partake in any other consensus decisions.
“Only devices that have not been tampered with or modified in any way can take part in the blockchain network,” Voon says.
This method of securing devices and blockchain networks is still in early stages of development, but it could have far-reaching implications for society and even the democratic process.
Although the prospect of Evoting isn’t on the cards in the near future, ICmetrics has potential to allow something like a smartphone to be authenticated and take part in verifying identity so we can tell that a vote is correct.
“Imagine we’re voting now and using your smart phone. Just launch the app, scan a barcode, and you can vote on your phone,” says Voon.
Barriers to Technological Innovation
London-based FinTech startups benefit from a combination of programs designed to spur growth along with tax breaks and incentives. This has contributed to the digital sector being among the fastest growing industries in the British economy, and these factors make the UK ideal ground for aspiring FinTech start-ups.
The country may boast a competitive advantage as the world’s leading financial hub, but significant barriers stand in the way of expanding the benefits of blockchain and technical innovation to society at large.
Voon explains that; “some technologies, like Artificial Intelligence and blockchain, are huge game-changers because they fundamentally change the culture of the workplace, not just a sector.
“If robots are in some way augmenting or replacing unskilled labour, Artificial Intelligence is enhancing and replacing skilled labour. Why do I need a data analyst and people processing contracts and benefit payments when smart contracts and AI could do that?
“If AI could write a smart contract, why do I need a developer? Why do I need a web team?
“All of a sudden, it’s changing the culture and some sectors, like the public sector, are very protective of their culture and the way they do things, so culture is the first barrier to break through for these disruptive technologies.”
A second barrier, he says, is the speed of the process of adoption; “The NHS is a good example of this. Their approach to technology in the past has been; ‘well we want to invest in tablets for doctors, so let’s begin the evaluation process for a tablet. Two years later they may standardise on that particular make and model.
“The problem is, in two years time, technology has moved on. What some of our blockchain projects do is come up with a quick comparison of side by side technologies, so the NHS can speed up the process of evaluation and begin adoption.
“The challenges within the public sector are not insurmountable – they’re with people and process, not the technology itself,” says Voon.
And yet these are challenges that governments and societies must overcome if they are to survive and thrive in the age of the technological revolution. Ultimately, governments that will win out in the long-term will be those that can effectively drive innovation across all sectors of society, harnessing the powers of new technologies to create an economy and culture in which its citizens have the tools to compete on a global stage.