Consumers are still warming up to the idea of companies using tokenization to reshape their business.
A new study from KPMG looked into how consumers feel about the prospect of blockchain-backed tokenization, which they believe could transform how businesses interact with the public.
Businesses are increasingly turning to tokenization in an effort to track materials, gain insight on their customers, and create incentives for further usage. The study discussed detailed use cases for tokenization as well as polls of how consumers felt about the topic.
As it turns out, consumers are very interested in what tokenization has to offer, with nearly 80% of American respondents telling KPMG that they are more willing to use tokens with companies they already buy from, "furthering their trust and confidence in those enterprises -- and making tokenization a tool for breeding and maintaining loyalty."
KPMG's "Blockchain-enabled digital tokenization is poised to transform commerce" detailed how tokenization is already enhancing the business practices of dozens of companies.
"By leveraging blockchain infrastructure, this digitalized form of currency uses digital tokens to control and exchange ownership in an asset or something else with perceived value. In doing so, tokens support transparent, immutable and frictionless transactions – and that is unlocking new models for engagement between businesses and consumers," the KPMG study said. "Tokenization can enhance the ability of enterprises to accurately and efficiently track the exchange of value associated with tangible and intangible assets."
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Tokenization was particularly enticing to the younger crowd, with more than 80% of those between the ages of 18 and 24 telling KPMG that they were interested in the future of tokens. More than 50% of Americans over 65 were also interested.
KPMG's report said companies were already incorporating tokenization into every aspect of their business, including things like loyalty reward programs. One airline told KPMG they built a a digital wallet loyalty program based on blockchain, to encourage its members to use their points in smaller amounts.
"Tokenization enables organizations to leverage blockchain infrastructure and value attributes to build robust security models that are embedding privacy requirements into technology solutions by design," the study said.
"The blockchain/tokenization approach – as noted earlier in the behavioral tokenization example – segregates consumer data from their specific personal information," the report continued.
The study also said blockchain could be integral to efforts in healthcare to track a patient's lifelong health history and even in real estate, where tokenization could revolutionize things like titles, property surveys and land-use agreements.
Security was a major concern for almost half of all the consumers that spoke to KPMG and had a high familiarity with tokens. Companies need to address these lingering concerns head on and leverage blockchain's security benefits to protect consumers.
"Tokens are enabling new ways to purchase products and services, enhance customer experiences, and strengthen customer trust and brand loyalty, in addition to numerous value-driving business initiatives," the study said.
"While still in its early days of adoption, tokenization is already reshaping commerce by enabling new ways to drive consumer behaviors to build trust and brand loyalty. Companies that ignore the potential of tokenization to transform business models and competitive landscapes may soon be leap-frogged by bolder players who are harnessing tokenization to create competitive advantages."
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