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IBM Partners With ZF and UBS for Car eWallet's Blockchain

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International Business Machines Corp. (IBM - Free Report) is strengthening its presence in the blockchain market at a steady pace.

After being part of multi-industrial blockchain deals in food supply, fintech, banking, and insurance sectors, the company has now struck a deal in the automotive industry. The new partnership is with automobile manufacturer, ZF Friedrichshafen.

Leading Swiss bank, UBS is also part of the project for the development of the blockchain framework for “Car eWallet”. The system will be based on hyperledger technology.

Car-eWallet is a blockchain based electronic payment and charging system for electronic cars. In January 2017, UBS, ZF and a German energy company Innogy first came together for the development and deployment of the project, and IBM is the newest partner on board.

We believe growth of the blockchain segment along with the rapid adoption of IBM’s artificial intelligence platform Watson will help the company perform better in the near term. Shares of IBM have lost 9.5% year to date, underperforming the industry’s decline of 8.8%.



Outcome of the Collaboration

Besides making payments and charging easy, Car eWallet makes the parking process smoother and can also authorize vehicle usage by third parties, when it is parked. It can also collect fees for the service. It has a unique feature that makes buying and selling of used cars easy as well. Paying tolls is also taken care of by the system.

All these features when combined with the unbreachable distributed ledger of blockchain technology will lead to the creation of a secure wallet. We believe, as the world is fast moving toward advanced driver assistance system (ADAS), Car eWallet is bound to win market share.

Blockchain Gaining Traction

Notably, blockchain technology is witnessing rapid adoption across industries due to secured storage and transmission of data through a decentralized database. Since the system is accessible by all the parties of the transaction, any alteration in the data is almost impossible. This makes the system extremely safe. With double counting and hacking being at bay, the possibility of monetary losses is low.

We believe all these features bode well for the technology. MarketsandMarkets predicts that the blockchain market is estimated to reach $2.31 billion by 2021 from $210.2 million in 2016 at a CAGR of 61.5%.

Apart from IBM, Microsoft (MSFT - Free Report) is also advancing as a key player of the industry, as evident from its recent collaboration with Hapoalim. It recently unveiled its flagship Coco framework for faster and secure blockchain based operations. However, the blockchain market is currently dominated by IBM and with this new collaboration, it is diversifying further.

Zacks Rank and Key Picks

IBM has a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader industry include Lam Research Corporation (LRCX - Free Report) and Applied Materials, Inc. (AMAT - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Lam Research and Applied Materials is projected to be 17.2% and 17.1%, respectively.

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