Author: mohitkudalkar

Blockchain Internet of Things:

As blockchains and sidechains increase rapidly, there are several important implications for the Internet of Things and the development of Smart Systems. Blockchain technology could provide a way to track the unique history of individual devices, by recording a ledger of data exchanges between it and other devices, web services, and human users.

Examples include electronic couriers to securely transfer sensitive information, escrow services to transfer ownership rights, or even auto-installation services to verify and push updates to the software governing other Digital-to-analog converters (DACs).
Interesting startups in this field:
Chimera-inc: Chimera connects the Internet of Things to real-time analytics performed on the edge node. It is a hub that links the home network to the cloud and electrical devices around it.
Filament: Filament is building a decentralized IoT stack to ensure that devices can securely communicate and transact value without any infrastructure. Filament builds sensors (called “Taps”) that are used by companies such as Amazon and Space X.

I think IoT with its capabilities has the ability to redefine the scope and possibilities in the financial technology sector. Frauds and other discrepancies would be easily detectable and prevented with all electronic trace being maintained in any kind of financial information exchange. Large corporations are heavily investing in this domain to be the first to market.

Reference: https://everisnext.com/2016/05/31/17-blockchain-disruptive-use-cases/

 

Ripple:  Funding $93.6 Mn;

Investor – Blockchain Capital, Satander Innoventures

Founded: SFO (2012)

Ripple is one of the first such blockchain-based settlement mechanisms: Its banking partners include UBS, Santander, and Standard Chartered. Ripple provides instant, certain, low-cost international payments. Ripple offers a global real-time payment system that enables banks and financial institutions around the world to directly transact with each other without the need for a central correspondent.

The company also offers FX Market Making, a solution enabling enterprises to gain access to cross-currency liquidity through a distributed network that allows foreign exchange to be externally sourced from a competitive FX marketplace or an internal FX trading desk. This minimizes FX exposure thereby lowering the volatility and counterparty risk of trades. Ripple Insights features industry updates, insider perspectives, and in-depth market analysis.

I feel the fact that Ripple does not take transaction fees like Paypal or other credit card companies makes it more of an attractive proposition for vendor, sellers. Ripple also has an advantage with stability and speed of transactions. Companies like Ripple can surely help eliminate frauds and financial thefts with their highly robust financial systems.

Reference: https://ripple.com/

 

P2P Insurance:

Peer-to-peer, or P2P, insurers put customers into groups based on a shared factor, usually the type of policy. The group’s members pool all their premiums, and payment for insurance claims come from the pool. The aim of P2P insurance is to make insurance cheaper and to reduce the inherent conflict between insurance carriers and policyholders at the time of a claim.

3  disruption factors which P2P insurance has:

• Building Power: Big names in insurance are throwing their weight behind P2P insurance startups like Lemonade. These new insurance companies in the fast-growing P2P segment are using crowdsourcing and social networking to create a shared insurance experience. More will follow their lead.
• Rebel Customers: With P2P, peer groups, such as owners of autos, houses and small businesses, buddy up to absorb each other’s risks, with all contributing money to insure each other’s losses. The startups promise a pleasant, powerful and even a little bit of rebel experience.
• Venture Capital: P2P startups have excited the venture capitalists by offering a technologically strong alternative to the existing insurance business model. By and large, their management teams generally are comprised of professionals formerly in leadership capacities with technology firms and insurance companies – fueling the growing category of InsurTech.

I surely feel P2P insurance is the way going forward. Crop insurance for farmers would be a very good application of P2P insurance. It would be a good solution for the farmers.

Reference: http://www.consultparagon.com/blog/peer-to-peer-companies-are-disrupting-insurance

Blockchain monetary solutions

A cryptocurrency is a digital form of an asset which can be used for exchange and to make transactions secure and control the creation and counterfeiting. Cryptic currency currently occupies a large share in the financial technology market. An example of such type of currency is Bitcoin which was introduced to see the response and try to win the consumer’s approval. Hence it is the first successful use of blockchain technology. I feel with digital currency, fake currency and counterfeiting would be a thing of the past.

Many startup companies have identified Bitcoin as a potential starting point and built their business models around it. For example, BTCJam is a service which is a bitcoin based P2P lending service. BitPay is a global bitcoin payment processor that allows merchants to accept bitcoin payments from customers while pricing their products in their local currency. BitPagos uses bitcoin to enable credit for online payments in the emerging markets where local currencies are subject to serious depreciation. Coinometrics that collect market data from Bitcoin exchanges to provide insight into the state of the Bitcoin economy. Coinbase and Kraken are the leading bitcoin exchanges. However, blockchain solutions go far beyond bitcoin applications.

Here are some companies in the blockchain domain I feel would be interesting:

1. Blockstream
2. BlockCypher
3. Chain
4. Wirex.

Reference: https://n-ix.com/exploring-use-cases-blockchain-technology-fintech/

Robot Advisors functionality:

Trusting your retirement savings with a computer might be a frightening task. But the investment strategies/ideas devised and managed by them are something which can’t be only developed by computers themselves. To suggest your investment strategy and then manage your money, robot-advisers use a human algorithm—a complex mathematical formula that considers three main elements: 1) the historical data of assets 2) Information you’ve provided about your investing goals, timeline, and 3) What is your principal; and a menu of low-cost investments, primarily index funds and ETFs.

With the help of this information, the algorithm decides the best way to achieve your financial goals. It will suggest an allocation in terms of different types of assets likr stocks, bonds, and cash, then over time buy and sell specific investments to make sure your asset allocation goals are met.

Because the various robot-­adviser platforms draw on the same historical data and offer comparable ETFs and index funds, the portfolios they suggest for investors with similar profiles may differ little from one another. For example, no matter which robot-­adviser a young investor who doesn’t expect to retire for several decades, he will probably be recommended a portfolio that’s almost entirely invested in equities (or stocks). That’s because over the long-term, stocks have outperformed other investments such as bonds and commodities, offering someone with more than a few years to go until retirement time to absorb the higher risk and maximize gains.

 

Reference: http://www.consumerreports.org/personal-investing/rise-of-the-robo-adviser/

Funding: unknown amount;

Investor: Converge Venture Partners; 2016; Palo Alto
Enigma provides solution for protecting usage data. It allows sharing data with others for processing without actually giving it away. It ensures that data is guaranteed to be encrypted at all times, even when complex analytics functions are needed. Enigma combines Secure Multi-party Computation (MPC) with Blockchain Technology to enable this highly encrypted cloud platform that is built from a network of computers that can store private data and process it, without being able to see the data they are operating on. Core functions of privacy and security are layered on top of distributed cloud technology, as a result it is a dynamic combination that transforms how data is stored and retrieved; providing industries like finance, health, and civil services the platform for having a secure and trustworthy data. This can be further used for mobile application development in this domain.

Reference: http://www.enigma.com/

Automated Robot Advisories:

Robo Advisors [e.g. Betterment, Wealthfront]: One-to-one communication between financial advisor and client was the defining feature of the relationship in the traditional wealth management and investment advisory. With lower fees, Robo Advisors use automation to select investments that meet client’s’ risk tolerance and growth goals. For less complex portfolios, algorithms can determine the appropriate level of risk in bringing investment services to an underserved market.

Robo Advisory companies globally are focusing on broadening the scope of robo advisory beyond simple portfolio rebalancing. As this area matures and diversifies into more sophisticated portfolio construction and other offerings, investment is expected to grow significantly. In the future, we will likely see a broadening focus of digital advice including a much more holistic view of the clients’ assets, income and liabilities; not just the assets under management for that given platform.

Robo Advisors are also expected to address investor behavioural issues by fostering adherence to sensible investment plan appropriate to one’s circumstances rather than chasing the last ‘hot’ sector.

While one of the leaders in the space is Betterment, a New York–based firm, Wealthfront is another firm that has more than $1 Bn under management under its proprietary algorithms. Old established players Vanguard and Charles Schwab launched Robo Advisers and now have more than $20 Bn under management. Other firms engaged in automated advisory services include Mint‐Bills, WiseBanyan, Bloom, FutureAdvisor, Personal Capital, and Motif Investing.

References:

https://www.accenture.com/_acnmedia/PDF-2/Accenture-Wealth-Management-Rise-of-Robo-Advice.pdf

https://fundersclub.com/blog/2016/11/30/your-money-in-20-years/

 

Hyperledger Project:

The Hyperledger project is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration including leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology. The Linux Foundation hosts Hyperledger as a Collaborative Project under the foundation.

 

Projects under Hyperledger Project

Blockchain Explorer

Blockchain-explorer is a project in Incubation that was proposed by Christopher Ferris (IBM), Dan Middleton (Intel) and Pardha Vishnumolakala (DTCC) to create a user friendly web application for Hyperledger to view/query blocks, transactions and associated data, network information (name, status, list of nodes), chain codes/transaction families (view/invoke/deploy/query) and any other relevant information stored in the ledger.

Fabric

Hyperledger fabric is a project in Incubation that was proposed by Tamas Blummer (DAH) and Christopher Ferris (IBM) as a result of the first hackathon during which a merge between IBM’s proposal and DAH’s proposal was started (see Proposal).

fabric is an implementation of blockchain technology that is intended as a foundation for developing blockchain applications or solutions. It offers a modular architecture allowing components, such as consensus and membership services, to be plug-and-play. It leverages container technology to host smart contracts called “chain code” that comprise the application logic of the system.

 

Ref: 1) https://www.hyperledger.org/

2) http://www.r3cev.com/about/

 

FIS is the most complex and difficult to manage information system used by companies to resolve financial issues faced by the corporate firms.

With the evolution of business trends in the market, FIS is very important for keeping a tab on the financial accounting and daily transactions being maintained. It is also responsible for audits, implementing processes and also to help external elements to evaluate a particular firm.

FIS mostly consists of:

1. Transactions
2. Accounting/Financial Books
3. Reporting/Visualization

With the advancement of technology, i feel there is a strong need for FIS to adapt to the world of Big Data, Cloud, IoT and Artificial Intelligence.

It would be interesting to see if companies adopt the cloud computing approach for storing/computing its valuable financial data or use big data technologies to make better predictions for their regular business.

 

Reference: https://www.techarex.net/blog/accounting-solution/future-challenges-for-accounting-information-systems/

The benefits of using a Financial Information System are:

• Rapid Decision Making: The Financial Information systems enable you to make quick and rapid decisions as it provides accurate, verified and consistent information.

• Better Planning: The system gives you a realistic and accurate view of your overall financial situation. This enables the company to make predictions, forecast and plan accordingly.

• Efficiency: With validations and security features of FIS there is no need to re validate and confirm the facts multiple times before making a final entry. It also provides historical information. It helps improve efficiency by minimizing efforts.

• Collaboration/Integration: FIS provides a platform or a base to integrate all the various business processes, functional processes and financial information of your company. This leads to better accessibility and improves performance.

• Numbers to action/ Reporting: FIS enables better analytics and reporting of financial information than traditional financial systems. They aggregate all the information together and has high scalability.

Reference: http://smallbusiness.chron.com/benefits-financial-management-information-system-71943.html