DB Systel and IBM tackle transportation with blockchain

DB Systel is one of the largest global mobility and logistics companies in Europe. With management of over 12 million passengers daily across their networks, the company always has its eyes on the latest emerging technologies, looking for ways to grow their business while increasing efficiency at the same time. The company’s research and innovation business unit is now focused on cloud, Big Data, IoT, — as well as AI and machine learning solutions. With a growing customer base, continued demand for advanced mobile applications, and a focus on speed and efficiency for its customers, DB Systel is constantly looking for solutions that can further streamline travel.

The Blockchain Advantage

With DB Systel’s goals of driving innovation and creating a first-mover advantage in public mobility – DB Systel, along with business partner IBM, recently embarked on a journey to blockchain technology. Blockchain is an immutable electronic ledger that allow tamper-proof transaction processing, high visibility of a transaction amongst business partners involved in the transaction, and rapid payment upon the completion of the transaction.

Seeking more transparency in it business networks and between its service providers, the company has built and deployed a blockchain solution – and they expect that their blockchain solution will change their business results dramatically.

With blockchain, the company expects to see:

  • 50% lower overall costs for service providers are expected, as well as less work to be done from the consumer side;
  • 100x faster, dynamic revenue splitting powered by smart contracts (improves overall cash flow); and,
  • Allows more trust and transparency with new digital ecosystems and business models.

Company Background

DB Systel, with its large network of international, regional, as well as municipal mobility business clients, has identified that constant mobile enhancements are crucial to keeping their customers happy. One such enhancement is “mobile ticketing.”

“With growth rates of 60 percent per year, mobile ticketing via apps is quickly becoming an essential distribution channel” said WHO? says Moritz von Bonin, Head of Blockchain & DLT Solutions at DB Systel GmbH. “Whether it be making apps simplistic and easy to use, or having features to collect real-time feedback, its about customers using the service.” DB Systel discovered IBM’s blockchain solutions could give them new visibility into the services they provide, while lowering costs.

Moritz von Bonin explains that the joint project that IBM and DB Systel are working on won’t necessarily just change DB Systel’s standing in transport, but it will change the industry as a whole. “As an established mobility service provider, we use our experience to actively think about the future and keep innovating –to make the travel experience easier for every passenger. Our broad vision encompasses all modes of travel. As the next step in our digital transformation journey, we are helping IBM to build a comprehensive travel platform for the entire transportation industry based on transparency and shared information, that many other mobility companies can integrate with quickly and easily to create a distributed digital and open ecosystem.”

Overall, both companies are focused on an open distributed travel platform, but they have gone as far as even discussing customer experiences when on travel routes. From a point of origin to a destination, passengers will be able to see and order food or services through their mobile devices. With such a service, passengers would be able to pinpoint where a service can be had – for instance a ready-to-collect coffee. Passengers could even interact with their mobile device to get mobility assistance when carrying loads of luggage?

IBM and DB Systel, using blockchain, do not think these services are too far away. They’re imminent.

The Deployment

With the goal of an open ticketing platform for faster and deeper integration between mobility companies, it became evident that blockchain could be the best platform for the company’s challenge. With IBM services, DB Systel GmbH created a blockchain project.

Moritz von Bonin adds: “Looking at our ticketing and revenue allocation processes, we realized that we could use blockchain to build a distributed, transparent and audit-proof journal of all ticketing transactions. Since all data in a blockchain is secured with cryptographic hashes, the technology is ideal for sharing information with the confidence that the data has not been manipulated. In the travel industry, this could mean that a customer can pay in a single transaction for a journey that spans multiple forms of transport and service providers, and that payment is automatically and correctly split between the relevant companies within a multi-institution business network. Likewise, the ticketing and any related services can all be handled automatically without the need for manual coordination between companies.”

Using smart contracts representing business logic and integrating them into the current infrastructure blockchain has the potential to solve critical business challenges. With transformation and automation enhancements can be made on things like revenue allocation or ticket validation processes. Daniel Kindler, Blockchain & DLT Solutions at DB Systel explains that with so many stakeholders in a typical transaction DB Systel understands it may take a while to get everyone on board to use smart contracts. However once people understand the value of blockchain and its ability to substantially reduce OPEX, it shouldn’t be too hard to get them on board.

IBM and DB Systel originally started with a blueprint before a finalized, fully functional proof of concept. IBM as a strategic partner was selected because of a deep understanding of the industry, a long lasting partnership, but also, because of the “team’s outstanding blockchain expertise.”

Kinder say, “In tight collaboration with IBM consultants, we designed an open ticketing platform that enables new levels of frictionless, trusted cooperation between a wide range of mobility providers. By joining forces, IBM Services and DB Systel can work from ideation through to production and lay the foundation for a robust, future-proof and scalable ecosystem that can grow dynamically by integrating new network members from the travel sector.”

Built on Hyperledger technologies, teamed with blockchain architects and developers, IBM has been able to successfully turn customer’s requirements in to solutions.

Overall, IBM’s tamper-proof, transparent architecture can help boost trust between all mobility providers involved in specific transactions creating an open ticketing ecosystem while boosting trust between parties. With cryptography, trust can enable closer collaboration with smooth information flow, real-time transparency, and new insights into transitional and revenue data. To add, through this blockchain initiative IBM and DB Systel look to establish a distributed platform that won’t have any major set-up and coordination costs. Bonin explains, “We are excited to explore what new possibilities the blockchain technology opens up – such as offering new services and developing entirely new business models to reinvent public transport and provide an even better user experience.”

Summary Observations:

At Clabby Analytics, we research and write about technologies we believe will change business models, make businesses more efficient, and in turn create a better overall experience for the customers of the products. IBM and DB Systel’s partnership has the ability to disrupt an industry.

With a customer base of over 12 million passengers a day, and DB Systel’s parent company the DB Group has annual revenues of upward $50 billion dollars. There are two giants working on this project. Using IBM’s Blockchain Platform, paired with experienced blockchain architects and developers, IBM is providing a pathway for DB Systel towards their goal. With well-polished mobile applications DB Systel expects to see a new generation of customers intent on easily using blockchain services to conduct transactions easily when traveling. DB Systel isn’t shy about using the newest emerging technologies coming to market to deliver new types of innovative results – in fact the company embraces the idea of being a market trendsetter.

It will be interesting to watch DB Systel as the company blends its mobile solutions with blockchain technology to create a distinct competitive advantage – on their way to disrupt the transportation industry.

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