I presented this proposal in the 2019 SPRU Science Technology and Innovation Policy Challenge with my friend Benjamin Cornejo Costas, and we received the main prize.
Blockchain technology is not only about Bitcoin the digital currency, or the recent one Libra, but it is crucial in shaping all businesses of the future, from freight shipment to food tracking to energy commodities trading to healthcare management. The policymakers and government leaders should get up to speed in exploring the blockchain’s potential. On this occasion, we are proposing its role in the mobility sector, especially for London transportation.
The analysis starts with the urban growth issues. Today, 55% of the world’s population lives in urban areas, which is expected to increase to 68% by 2050, according to the UN. This massive amount of people will partly create traffic congestion and contribute to air pollution. There are also concerns about climate change and energy security.
Mobility as a service (MaaS) is seen as a promising way to address urbanisation challenges. It is promoted as a better way to manage traffic congestion by making more efficient use of existing private and public transport infrastructure, including collective transportation such as car-pooling and ride-sharing. MaaS could improve air quality by shifting travelers from cars to more sustainable modes with a seamless unified payment system. With the emergence of technologies and digitalisation, MaaS becomes on-demand not only to fulfill transportation needs and the above challenges but also to contribute to revenue. Projection suggests that the global market for MaaS will exceed $US 1 trillion by 2030. With the above incentives, not surprising that MaaS is one of the agendas being discussed in the Future of Mobility project, as part of the UK industrial strategy.
The Netherlands and Denmark are two successful examples of MaaS implementation at the national level, with Ov-chipkaart, a contactless smart card system across The Netherlands, and Rejsekort, a commuter combi travelcard popular throughout Denmark. Finland also developed an outstanding MaaS solution named Whim mobile application, offering bundles of mobility services including public and private transports in Helsinki city. The same case happens in Stockholm, Sweden with its Ubigo system. Meanwhile, the UK is adopting the Finland Whim, which is piloting in Birmingham, but not yet London.
But, all those case studies are successful in less crowded and less dense cities than London. Will it work in London? Furthermore, we also identified the following barriers:
- Market access and integration between public and private systems.
- Development of trust for collaboration.
Two challenges above have been addressed in other previous studies with the following recommendation that we have summarised.
- The barrier of market access can be tackled by not only merging all the services in one application but also allowing other players to compete under the same regulation. The integration contemplates that the private MaaS system will cover some regions (demand-driven) where the public network will not. In this regard, neighbourhoods not covered by the public system will have the option to use direct private sharing vehicles to get to their destinations.
- The trust barrier is considered less difficult and can be tackled by two steps. First, normalising the rules and procedures of the new way of transport according to TfL (Transport for London) standards. The idea here is to normalise the rules to create loyal competition, worthy wages, labour rights and to tackle the coordination failures between private-private and public-private systems. Second, signing written guarantees such as contracts, to avoid any misunderstanding and build the trust of the system.
However, we also identified another MaaS challenges to be answered yet: Sales channel restrictions and payments integration, as well as the undefined principles for data sharing, access, and security. These barriers concerning the transparency of the system, are the most challenging barriers regarding the merge of both systems with multiple players. In this regard, we propose to implement blockchain technology.
Now, what is Blockchain, and how does it exactly works?
Blockchain is a specific type of data structure called a distributed ledger, that is cryptographically linked together in a sequence of blocks, containing a record of transactions. When a transaction is initiated, for example, a customer taking transport, data is packaged in a block. The block is broadcasted to all members of the network. After the network nodes approve, the block is added to the chain and the updated chain of blocks is being distributed to all parties. Once these blocks are collected in a chain, they cannot be changed or deleted by a single actor, instead, they are verified using shared protocols. This data validation is the core innovation of blockchain which can effectively secure data against unauthorised access or manipulation. The bigger the blockchain network, the more tamper-resistant it is.
Now, how does it add values to MaaS?
A secure ledger based on the blockchain can be used to manage financial data, including transaction tracking & profit distribution in a fair manner to the public and private transports. It allows a reliable and unchangeable data record in the unified payment system, therefore all parties will be more willing to trust and cooperate with each other.
Second, blockchain is used for personal data management since it enables a secure digital identity, For example, while using carsharing, the user generates a lot of personal data. These preferences could be saved in the system without any concerns about becoming a transparent customer, hence privacy. Not just the user, a driver’s profile is also a valuable dataset where management and authentication are important.
And the last one, not only addressing MaaS challenges, implementation of the blockchain will generate a positive effect, by increasing the efficiency of the network. From the immutable data, the transport leaders can analyse the commutes done in London which then can be used to plan a more efficient transport network in the future. As a consequence, this will create better control over fiscal matters, hence generate more incentives to the city.
Blockchain technology encourages the building of ecosystems with many participants, who share similar interests but don’t trust each other, perhaps because of the competition in the market. The shared blockchain ecosystem enables the cooperation of all parties and leads to increasing efficiencies therefore very much suitable with our MaaS challenges.
In a nutshell, Blockchain has potential values for the transportation sector, especially MaaS, in terms of managing financial risks, managing data security, and leveraging complementary assets.