Tag: BFSI

Bitten by the Blockchain Bug | Sherpas in Blue Shirts

The business world is abuzz with the potential benefits of blockchain distributed ledger technology and the wave of disruption it will bring in not just payment transactions but also sharing information of value to participants in a distributed ledger. The media are already referring to it as an “internet of value.” Even though Blockchain is still nascent, a research report predicts the blockchain market will be worth $5.4 billion by 2023. In this blog post, I’ll highlight how some organizations around the world have decided to capture value from blockchain.

Although blockchain first captured attention of banks and other financial institutions, the use cases have expanded far beyond the BFSI industry. In all corners of the world, organizations have been conducting blockchain pilots and proofs of concepts, evaluating its validity, security and how it stacks up against delivering on their business objectives. Need evidence? Look at the following examples.

Blockchain use cases

Secure Communications. Since they invented the internet, you probably remember DARPA (Defense Advanced Research Projects Agency) the research unit of the U.S. Department of Defense. Now DARPA is funding startups to develop blockchain to ensure secure communications in the area of weapons systems development and in storage. In the intelligence arena, blockchain could help determine data integrity and whether hostile players have viewed or modified information.

Discover Issues in Mission-Critical Process. Lockheed Martin recently announced it is incorporating blockchain into its operations to improve efficiency and cybersecurity in its systems engineering processes, supply chain risk management and software development efforts. In addition to its operations in developing military weapons, the firm is involved in several NASA space projects requiring smaller, nimble operations.

Improve Transparency in Internal Workflows. Software giant Oracle was granted a patent to use blockchain to improve real-time transparency and keep data on employees’ tasks in a workflow. Another benefit? Protecting proprietary or sensitive information in workflows.

Raise Funds. Crowdfunding is an obvious use case for blockchain. But the World Bank is taking this application further. It plans to use blockchain in issuing bonds to help Kenya’s government. The concept was already tested by Australia’s Commonwealth Bank regarding a provincial treasury service.

Sharing Medical Information. In April 2017, a Japanese insurance company, Tokio Marine & Nichido Fire, won the second annual Efma-Accenture Innovation in Insurance awards. The company created a blockchain-based platform for sharing patient’s medical information among relevant parties. It’s being touted as a “new best practice.”

Healthcare Incentive Programs. I blogged before about blockchain being ideal for incentive programs. That use application is now evident in healthcare. Healthcoin is a blockchain-enabled platform focusing on insurers and employers incentivizing people to make lifestyle changes to prevent diabetes. Patients earn tokens they can cash in for rewards.

Reconciliation Among Reinsurance Companies. The reinsurance business involves complex relationships among insurance companies, a tedious, multi-ledger process of calculating multiple exchange rates and currencies, transaction costs – those aspects that I refer to as “friction” in a business process. Currently, a group of 15 of the world’s largest insurance companies are working on a blockchain-based prototype designed to simplify the process. The group hopes to reduce the transaction time from seven weeks to almost instantly. One of the companies had already completed its internal blockchain pilot for handling bonds for catastrophic events.

Assets Sales Transactions and Government Records. Malta plans to use blockchain in its Lands Registry and national health registries. Sweden, Honduras and Brazil are among the countries exploring how to use blockchain to track progress in real estate or other asset sales transactions.

Contributions Transactions. The United Nations has a cross-agency blockchain working group, which is analyzing the use of a blockchain distributed ledger system in international assistance. The UN is considering blockchain for the digital currencies, supply chain management, self-auditing of payment, identity management and data storage aspects of the potential system.

The United Nations is also studying how to rethink cash-based transfers. Within that study, the UN’s World Food Program is conducting a proof of concept (and an upcoming pilot) using blockchain to improve security and eliminate administrative fees in distributing humanitarian aid.

Service Providers’ Incubators. All major service providers have conducted in-house proofs of concept and pilots for various use cases. Some have taken this strategy a step further and are creating environments (or incubators) where their enterprise clients can experiment with blockchain technology for their own applications.

Blockchain as a Service (BaaS). IBM is one of the service firms providing client support of blockchain production pilots in a low-risk, fail-fast platform in its Bluemix cloud. Recently Big Blue boosted this Blockchain-as-a-Service platform to provide even more value by enabling multi-company blockchain networks across Bluemix regions and subscriptions.

What you need to know

So, what’s the big takeaway that emerges from this glimpse into current trends in blockchain adoption? The use cases are quickly expanding to more industries and governments, and I’m seeing a lot of activity across the board from different kinds of players. Yes, it’s still in an early growth stage. But if you were to ask me what’s really happening with blockchain technology now, I’d say organizations are finding more and more ways to capture business value from it. Creating new value is a prime focus for most companies, so I look for blockchain to be highly disruptive and the adoption pace to quickly grow.

A Pig in a Poke: Trump Administration Policies Could Spell Trouble for Banking Industry | Sherpas in Blue Shirts

Thus far, the banking industry has expressed optimism about the Trump administration’s policy announcements, particularly with respect to potential rollbacks of Dodd-Frank regulations. As evidenced by the positive upswing bank stocks have experienced since the election, the banking industry is thoroughly enjoying the prospects of reduced regulations, expansionary fiscal policy, corporate tax cuts, and increased infrastructure spending.

After suffering a decade of challenges and disappointing performance since the 2008 financial crisis, it is no wonder banks would revel in a swing of the pendulum. This euphoria, however, may be short-lived, because some of the potential policies being floated by the Trump administration – particularly as they relate to global service delivery models – have strong downsides that must not be ignored.

Chief among the downside risks is the Trump administration’s strong position on US job protection. The cost challenges of the last decade have necessarily led banks’ significant use of offshore labor for back-office business processes and customer contact-centers. In many cases, over 50 percent of the FTE involved in business processes and IT for US banks are in offshore locations. This significant workforce is at risk of becoming the next target for President Trump’s bully pulpit.

In addition, the proposed visa reforms and border restrictions will reduce access to skilled technical resources at a cost-effective rate. Or, as Everest Group CEO Peter Bendor-Samuel puts it, visa regulations mean less access to the same cheap labor. Combining that with the draw of Fintech firms fighting for the same talent, talent scarcity will have an overall impact on the ability for banks to compete in the ever more technology-driven arena of banking innovation.

Other risks aren’t as clear but warrant monitoring, including the potential that trade protectionism could ultimately lead to an overall slowing of the US economy, restrictions on the ability to freely move corporate resources internationally, and the tightening of foreign ownership rules.

Everest Group cautions organizations in the US banking industry not to buy a pig in a poke, that is, foolishly revel in the benefits of attractive policies without fully examining the impact of policies that may have damaging repercussions. At the very least, banking institutions should investigate the full scope of the political strategies of the Trump administration, consider the implications, and develop strategies to mitigate the potential downsides of those policies.

We invite you to view a recording of our recent eye-opening webinar hosted by Todd Hintze, Managing Partner, and Mark Lade, Associate Partner on how Trump policies and other growing protectionist policies will impact your operational strategy. You can also read their complimentary viewpoint on the topic titled Navigating the New World (Dis)Order – a must read about this disruptive topic.

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