People are more mobile than ever and demand that public transport is fast and convenient. How could DB Systel and IBM make journeys involving multiple forms of transport seamless and less cumbersome?
DB Systel and IBM focused on driving innovation and creating a first-mover advantage in public mobility by enabling transparent business networks between service providers using blockchain technology.
50%lower overall costs for service providers expected plus reduced effort for consumers
100xfaster, dynamic revenue splitting powered by smart contracts improves cash flow
Booststrust and transparency, enabling new digital ecosystems and business models
Business challenge story
Simplifying travel for everybody
Be it the daily commute to work, a longer journey for business or a short break over the weekend, many people all over the world increasingly rely on public transport to get around. Being able to easily choose the most convenient travel option makes booking online and via mobile apps very attractive. However, when journeys consist of various transport modes, such as rental bicycles, buses, regional and long-distance trains, flights, taxis and others, each run by a different geographically distributed mobility company, buying, managing and validating tickets becomes difficult and time-consuming for customers. And from the perspective of service providers, tasks such as allocating revenues and rebooking customers automatically become even more complex in the event of a missed connection.
DB Group is a leading mobility company in Europe, and its IT service provider DB Systel works with a wide range of international, regional and municipal mobility businesses to ensure a seamless travel experience for nearly 12 million passengers per day. With growth rates of 60 percent per year, mobile ticketing via apps is quickly becoming an essential distribution channel. Creating a smooth customer experience through simple apps and real-time feedback to the customer – and all connected mobility companies – was a key priority when DB Systel, the digital partner of the DB Group, together with its strategic partner IBM, when sketching out an open distributed travel platform for the future.
Moritz von Bonin, Head of Blockchain & DLT Solutions at DB Systel GmbH, explains: “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 transport 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.”
While at first the focus will be on connecting transport services to provide a seamless experience for customers, IBM and DB Systel are already thinking ahead by considering extensions to the platform to solve additional business challenges. Reducing the complexity of travel and offering individuals a full-service customer experience from the starting point to the destination could include many other optional services to create value – from a ready-to-collect coffee at the station to mobility assistance when carrying a lot of luggage.
Leveraging innovative blockchain technology
DB Systel’s idea was to establish a new, open ticketing platform and allow for faster and deeper integration between different mobility companies.
It quickly emerged that blockchain was the most promising technology to tackle the complex challenges. As part of a group-wide optimization and innovation program, DB Systel set up an agile, cross-disciplinary blockchain project team to work closely with its strategic partner IBM Services.
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.”
Building on the blockchain platform, the concept by IBM and DB Systel uses smart contracts which represent business logic that can be integrated into the architecture and triggered by, for example, ticket transactions. Daniel Kindler, Blockchain & DLT Solutions, DB Systel GmbH, confirms: “Blockchain technology in combination with smart contracts will help to solve critical challenges in the transport industry by transforming and automating, for example, revenue allocation and ticket validation processes. It is a major task to get all internal departments and external mobility providers on board to work out the details of the smart contracts. Nevertheless, once everyone agrees to the allocation rules, the new solution will substantially reduce operating costs for every business using the open blockchain platform."
In the future, customers will be able to use a simple app from any of the connected businesses within the digital ecosystem. Whether their main point of contact is through municipal bus companies, regional commuter train operators, long-distance, high-speed train companies, taxi dispatchers, ferry services or airlines, customers will always benefit from all the routes offered within the open business network. All the complexity involved in the booking process to provide this flexibility will disappear and mobility providers can offer their services flexibly through the open platform.
To get started quickly, IBM Services and DB Systel first developed a blueprint before implementing a fully functional proof of concept.
Moritz von Bonin adds: “We looked for a strong technology partner and selected IBM, one of our strategic partners, because of the team’s outstanding blockchain expertise. By forming a solution partnership with IBM, we benefit from IBM’s global reach as well as the proven and flexible technology, and IBM benefits from the in-depth industry knowledge of DB Systel, the digital partner of the DB Group, and from working with one of Europe's leading transport companies in cooperation with numerous other mobility providers.”
Daniel Kindler continues: “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.”
Under the IBM Blockchain brand, IBM brings together advanced expertise and technology to offer innovative solutions and services built on Hyperledger technologies and supported by experienced blockchain architects and developers from IBM Services who can rapidly turn concepts into solutions. Depending on customer requirements, IBM Cloud services can also be part of an integrated blockchain solution.
The central Hyperledger Fabric framework and Hyperledger Composer tool are open source implementations for developing blockchain applications with modular architecture and are hosted by The Linux Foundation, of which IBM is a Platinum Member.
Boosting profitability and gaining faster insights
Using blockchain technology, IBM and DB Systel benefit from a fully-integrated enterprise-ready blockchain platform designed to accelerate the development with tooling supporting the complete lifecycle of the solution.
The companies aim to increase process efficiency to save time and money. Daniel Kindler elaborates: “Using IBM Blockchain solutions and services should reduce the overall costs by approximately 50 percent. The solution automates processes between transportation partners, and it also saves time and effort for passengers – who will be able to buy a single ticket spanning multiple legs of a journey. From our collaboration with IBM, we clearly see the potential of the blockchain approach for an open ticketing ecosystem.”
The tamper-proof and transparent architecture of blockchain technology helps IBM and DB Systel to boost trust between all mobility providers involved. Cryptography is an essential feature of the blockchain, which creates common trust and enables closer collaboration with smooth information flow and real-time transparency, enabling new, faster insights into transaction and revenue data.
Daniel Kindler explains: “By taking advantage of smart contracts, we can reduce the need for manual coordination between service providers and establish a reliable solution for distributed automation, driving down costs and speeding up the process. Today, revenue allocations are often handled manually and there is no standard contract framework. The contracts are settled only every quarter, and it can take even longer between some companies. By using IBM Blockchain technology, we can offer 100x faster and dynamic revenue splitting, completing the process within a single day. And after that, we plan to extend this even further and offer real-time insights without any delays."
Moritz von Bonin remarks: “Building a flexible and open blockchain platform for travel and transportation is a win-win-win situation for everyone involved. The customers benefit from a single-entry ticketing platform with faster and more convenient offerings. DB Systel and all other mobility service providers make their offerings more attractive, improve efficiencies and generate new leads. And IBM expands its solution portfolio with a proven platform, pioneered by a leading company in the mobility industry.”
Through its blockchain initiative, IBM and DB Systel are following a three-stage process with the goal of building an open, comprehensive mobility service ecosystem. The companies aim to establish a distributed blockchain platform to offer multimodal journeys without major set-up and coordination costs.
Moritz von Bonin concludes: “We are expecting major improvements with our new ticketing strategy based on blockchain technology. Together with our strategic partner IBM Services, we have created a pioneering concept and future-proof solution for the industry. 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.”
Daniel Kindler expands: “In addition, we are also already looking beyond passenger transport, including, for example, more seamless documentation in logistics and freight transport. Moving processes onto the blockchain offers immense potential across all our business areas.”
About DB Systel and IBM
DB Systel GmbH is the IT, digital research and innovation business unit within DB Group, one of the largest global mobility and logistics companies in Europe, managing 12 million passengers per day across all networks and services. Headquartered in Frankfurt, Germany, DB Systel focuses on the latest trends and future technologies including cloud computing, big data, Internet of Things, artificial intelligence and machine learning. The company employs 3,800 people and its parent DB Group achieves annual revenues of approximately EUR40.6 billion (USD50.3 billion).