In this article, I look at Mphasis’ Blockchain initiatives and at the segments they are focusing on for further development with their financial services clients. Mphasis began its Blockchain initiatives in 2016, initiating internal experiments and POCs to understand the technology and how it can be applied to business challenges.

Mphasis is working with a global financial services company on POCs and an approach to bringing a customer identity solution to the financial services market, in order to address consumer data challenges in a global environment. The customer and Mphasis are working to address multiple issues including:

• Solution construct, design approach, and related technology considerations to select the right Blockchain technology from different options such as BigchainDB, HyperLedger, Ethereum, Multichain, network transaction currency and conversion to fiat, engagement layer and access point technologies
• Industry ecosystem participation considerations – incentives, privacy protections, regulatory compliance considerations, trust and risk, and access point technologies to join the network
• POC prototype and demo – for an initial MVP.

The POC took 7 weeks to demonstrate that the technology works and compliance is achievable. The solution was set up as a multi-node environment that enables the industry participants to transact, by enabling functions such as set-up and administration, search, crypto-payments, transaction administration, analytics, regulatory oversight and access.

Since then, Mphasis has built an ecosystem of Blockchain tools and best practices, and conducted multiple POCs. Clients are narrowing the range of use cases they wish to pursue further and are driving some of those into production.

Mphasis’ Blockchain services & use cases

Mphasis has a core group of 10+ engineers working on Blockchain initiatives who are based in Bangalore. Key attributes of Mphasis’ Blockchain ecosystem include:

• POCs completed to date: 12, of which 50% were client requested and 50% internally undertaken
• Clients engaging on Blockchain: 7 across banking, insurance, and airlines
• COE founded: 2016
• Platforms employed: Ethereum, Hyperledger, Multichain, and Bigchain.

Mphasis focuses on the Etherium and Hyperledger platforms in its Blockchain work, and expects to add a capability in Quorum soon. Key POCs to date include:

• Trade finance for banks: enabling a decentralized network between importer, exporter, port authorities, and banks. Key issues addressed include document verification, fraudulent activity incidence, and document losses
• Mortgage document management: the goal is to store documents on the DLT as a customer goes through the loan application process. This will allow vendors (e.g. insurance companies) to access the documents and speed up TAT, which will reduce cost of origination and improve customer experience
• Record keeping: enabling a single version of the truth, with additional components including IOT and smart contracts
• Patient health records: enabling confidential sharing of patient records and with intended participants
• Baggage-as-a-service: distributed, decentralized system for tracking bags during travel by passenger using mobile device
• Group insurance claims: stakeholders including hospitals, insureds, insurer, and third-parties transact and exchange documents to enable fast settlement of claims
• Contract management: digital signing of documents on a Blockchain network to ensure transparency
• KYC registry: enabling a KYC market utility using Blockchain.

Going forward, Mphasis will focus on:

• Consulting for clients considering Blockchain initiatives
• Delivering Blockchain implementations (POC or operational) with integrated application suites to reduce time to market and increase platform efficiency
• Delivering operational support for Blockchain environments based on its solution experience.
• Continuing to create use cases around KYC registry, mortgage document management, trade finance, baggage-as-a-service, and group insurance claims.

Conclusions

To date, most Blockchain services vendors have been focused on enabling small groups of direct stakeholders to use Blockchain to eliminate the need for third-party support. Mphasis has focused instead on enabling stakeholders to bring in third-parties as customers, and use Blockchain as a highly secure, reliable self-service tool. This should allow data holders, the sponsors of these initiatives, to monetize their investments in customer data and documents. This will allow Mphasis eventually to transition its Blockchain services towards operations support and cybersecurity. By supporting its clients’ efforts to drive revenue growth, Mphasis is able to support compelling use cases for employing this technology.

In this blog, I look at Capgemini’s Blockchain initiatives and what segments they are focusing on for further development with their financial services clients.

Initially, Blockchain engagements were focused on: 

• Using POCs to develop an understanding of the capabilities and limitations of distributed ledger technology (DLT)
• Developing business use cases, trying POCs to determine if there is an effective business application of the technology
• Conducting due diligence on vendors to understand the supplier ecosystem.  

Recently, financial institutions have been narrowing the range of use cases and vendors they are willing to consider. They are looking to drive forward one or more use cases to full production, and their focus with Blockchain services vendors is to develop a selective roadmap for operational deployment of a few high priority engagements.

Capgemini’s Blockchain services & use cases

Capgemini has been pursuing Blockchain for two and a half years, and it has a group of 25+ engineers working on Blockchain initiatives, with seven engagements currently in play. Capgemini’s Blockchain practice believes successful initiatives require a combination of business domain and technology expertise, and it focuses on five areas:

• Technology expertise: especially DLT, cybersecurity, communications, and data management
• Domain expertise:
  • Structured finance: trade finance and factoring, non-listed, non-codified bilateral agreements
  • Payments: real-time international payments transactions, including compensation, settlement, and reporting
  • Capital markets: Post Trade Automation (including optimized Collateral operations), Syndicated & Commercial Lending, and Non-Listed Securities
  • Insurance and reinsurance: focused on European companies for smart contract management 
  • Digital identity: security and personal identity for access to the DLT
• Program management: DLT projects are complex and agile, with the client and vendor are working together on the project  
• Alliance partners: cloud providers, and product vendors. Capgemini participates on industry panels, especially on Hyperledger Fabric, to create and support roadmap development
• Partner on business: platform-based operations delivery. Creation and governance of the utility that will provide service to the clients.

Currently, Capgemini works with four key technology stacks:

• Symbiont
• Hyperledger
• R3 Corda
• Ripple.

Capgemini believes it is differentiating to understand the current state environment within a given client (both business processes and technology processes). Further, that understanding is required to be able to effectively reimagine processes using any advanced technology, especially Blockchain.  

Ultimately, Capgemini wants to act as a universal integrator, partnering with technology providers to support clients redesigning their business with Blockchain centric services that also leverage complementary capabilities like AI or machine learning. Capgemini is aiming to serve as the Transformation Partner for their clients, where Distributed Ledger Technology is the transaction framework to deploy next generation, collaborative operating models. Working with key partners, they will continue to evolve core technical competencies in Blockchain to its clients, such as:

• Blockchain as-a-service
• Security as-a-service
• Identity management as-a-service.  

Conclusions

To date, most Blockchain services vendors have been:

• Delivering POC engagements to clients as clients work to identify opportunities to use Blockchain technologies, or…
• Building Blockchain POCs for utilities they might productize for clients.

Capgemini is pursuing a third path of building on its extensive work with client legacy systems, and coupling that domain knowledge of the client with its own ability to coordinate multiple technology vendors to create faster, more effective business restructuring around Blockchain capabilities.

Ultimately, as Blockchain technology matures, Capgemini will transition to providing Blockchain infrastructure services focused on security and technology platform outsourcing. While the technology is still at a very early stage, adoption is increasingly looking to be done primarily by tier-one institutions. The technology will mature rapidly, and infrastructure providers will be harvesting most of the revenues being created for vendors in Blockchain.  

Most Blockchain use cases have focused on reducing the need for (and cost of) infrastructure. And in Virtusa’s case, the vendor has focused on engagements where it can combine Blockchain technology with other emerging technologies such as QR codes, IoT, and encryption algorithms to deliver enhanced security and cost savings for environments lacking adequate supporting infrastructure. Here I take a look at Virtusa’s Blockchain initiatives.

Virtusa’s Blockchain services & use cases

Virtusa has been pursuing Blockchain for 3 years, and it has a group of 20+ engineers working on Blockchain initiatives, with 35 additional engineers in training in Hyderabad, who will be fully deployed by Q4 2017. Virtusa provides consulting and pilot services including:

• Strategy and design:
  • workshops for awareness and adoption
  • Use case creation and validation
  • Advisory on technology and vendors
  • Research on 400+ Blockchain startups  
• Sandbox:
  • Cloud-hosted experimentation
  • ~7 Blockchain variants, including: R3 Corda, Etherium, Multichain, Chain.com, Hyperledger, Quorum, and VP Blockchain
  • APIs to key platforms (primarily CRM and ERP)
  • Testing capabilities with very large datasets
• Accelerators:
  • 100+ pre-compiled use cases across multiple industries
  • Solution accelerators (listed financial industry only): payments, credit monitoring, check fraud, trade finance, OTC derivatives, interest rate swaps, and covenant management
• Advanced: 
  • Security (keyless cryptography, and homomorphic & format-preserving encryption)
  • Industry steering council participation in ISO TC-307 Blockchain and distributed ledger technology

To date, Virtusa has worked on ~100 use cases with clients, of which ~50 have been moved into pilots and remain active engagements. Of the active use cases, ~40 are in the financial services industry. Currently, Virtusa is working on three key use cases to develop them into operational deployments. The top three business patterns that establish strong use cases are:

• Provenance: check books or other financial instruments can be validated as authentic from a chain of ownership. Example: use of QR code on checks for retail bank customers to reduce check fraud
• Chain of custody: KYC, AML checks on transactions moving through an ecosystem. Example: rather than conduct comprehensive KYC/AML checks, as updates are required, banks can conduct KYC/AML checks from the last verified point in the Blockchain  
• Permission-based sharing of information: third parties can now share information securely based on homomorphic encryption (low cost) and format preserving encryption (used extensively today in the cards processing business) and benefit from the blockchain enforcement of rules to remove the need for a trusted third party. Example: use of IoT to log usage of farm equipment leased to multiple parties. 

Virtusa is moving all three of these use cases into production with its clients over the next ten months. It believes that its most differentiated offering is the permission-based sharing of information, due to its access to very low-cost, strong encryption technology. All three of these engagements are based in APAC/Middle East markets. Deployment of operational Blockchain environments in the mature markets of the U.S. and Europe are less likely in the short run due to strong existing infrastructure and the need to establish industry standards. However, changes in the mature markets, such as Brexit in Europe, and the recent announcement of support in production e.g.  Hyperledger fabric version 1 are likely to drive adoption because those changes will either require costly new infrastructure or a group of partners sharing a Blockchain environment.   

Conclusions

The case for Blockchain operations is developing fastest where institutions operate with little infrastructure (physical or institutional) and services vendors can combine multiple technologies beyond Blockchain itself, to deliver the functionality of a mature marketplace without the industry-wide investment required to create a mature marketplace. This favors business cases where banks operate in an emerging market or where a new bank product is getting deployed which does not have competitors in the market today.

By developing a set of use cases for Blockchain in banking, Virtusa can support clients who differentiate themselves by unique product offerings. Virtusa can help those clients reduce their time to market, which will provide the longest time in market with a product which has no close competitive offerings. By adapting the mix of technology products it combines with Blockchain technologies, Virtusa will also benefit from time in market with few or no close competitive service offerings.   

Many Blockchain services vendors have observed that up to 75% of proofs of concept for Blockchain fail to meet their goals. Analysis of drivers for such widespread failure indicates that the initial use case was flawed because it was constructed to justify experimentation rather than solve business challenges. However, TCS has focused its Blockchain efforts on developing uses cases that can drive successful adoption and, more importantly, define the ecosystem for successfully meeting a use case’s key performance criteria. In this latest blog on current Blockchain activities in the financial services industry, I look at TCS’ approach to Blockchain in banking.

TCS’ Blockchain initiatives

TCS has been pursuing Blockchain for 3 years, and it has a group of 100+ engineers working on Blockchain initiatives across all industries. In banking, TCS’ Blockchain group is based in Chennai. TCS’ primary goal is to develop effective Blockchain use cases for the banking industry, and to date has successfully developed 150+ uses cases across all industries.

The use cases for banks segment into key areas of interest for banks:

• Trade settlement (securities, FX, payments, etc.)
• KYC/AML
• Trade services (import/export). 

The largest demand for Blockchain services so far is for KYC/AML services. The key drivers for these areas of interest are processes where one of the following conditions apply:

• Process requires frequent document re-verification: KYC requires re-verification periodically, and for each new product sale. Trade finance requires re-verification as the documents pass along a chain of activities, with multiple counterparties
• Timelines and chain of activities must be attested: dispute resolution in trade settlement and trade services requires the ability to trace back to the point in time where a discrepancy in the interpretation of activity occurred.

The processes are primarily from closed loop transactions.

TCS offers consulting, ITS, and process audit services for Blockchain activities. In financial services, TCS has blockchain initiatives in retail banking, investment banking, capital markets, commercial lending. While TCS has not completed the implementation of blockchain project in operations delivery, it has done several POCs for customers in payments, securities settlement, trade finance, "know your customer" and supply chain finance. It is currently involved in a live Blockchain operations environment for a large global bank for Blockchain support of payments), providing audit support for the project. This allows TCS to enhance its understanding of what works and doesn’t work in a Blockchain environment, of which there are few, and none of scale, at present.   

TCS works with major Blockchain technology vendors including Ericsson-Guardtime, IBM, Microsoft, and associations (e.g., MIT Media Lab Digital Currency Initiative) as well as through its COIN partners. It has a proprietary Blockchain solution, which it deploys as required in its POCs, but does not sell as a standalone solution.

Conclusions

Global financial institutions are heavily experimenting with Blockchain to understand how and where to use it in their business – or even better, how to use it to change their business model. However, our research shows 70% to 80% of Blockchain POCs fail to meet their initial business case. The biggest challenge in Blockchain is understanding what makes a good business case, and getting stakeholders to cooperate on adoption. The technology, despite its arcane and novel characteristics, is not the primary impediment to adoption.

TCS is focusing its Blockchain efforts on developing a granular understanding of how Blockchain works, and when it succeeds in a business environment. This approach will create efficiency in Blockchain adoption for financial institutions because they will waste less effort on “a solution in search of a problem” and spend more resources applying the right solution to business challenges. TCS is not there yet, but headed in the right direction.    

This is the second in a series of blogs on current activities, use cases, POCs, and pilots with Blockchain in the financial services industry. In this one, I look at some of what Wipro is doing to support banks and financial services companies in deploying Blockchain solutions.

Blockchain technology & services

Wipro has been active for the past three years in offering Blockchain consulting and development. During that time, it has worked primarily with Ethereum, and Hyperledger, to develop its Blockchain solutions. Wipro has decided to be agnostic about technology partners because of the rapid pace of development and innovations in Blockchain technology, but it does have partnerships for cloud-delivered services on Blockchain. Current partnerships for cloud-delivered Blockchain services include:

• IBM Bluemix
• Microsoft Azure DevTest Labs
• AWS.

In Blockchain, Wipro provides the following sets of services:

• Advisory: engagement with thought leaders and CXOs to ideate strategies, plan roadmaps, and build use cases
• Technology: building POCs, pilots and production solutions with clients
• Infrastructure:  BLaaS – Blockchain Lab-as- a-Service (which allows clients’ internal teams to experiment and co-develop with Blockchain technology).
• Blockchain network services : to build Blockchain networks

Use cases & POCs

Wipro has developed use cases and POCs across industries. In banking and financial services (excluding its insurance use cases), Wipro has focused its efforts on five critical use cases to date:

• Banking:
  • Skip trace
  • Cross-border payments
  • Trade Finance
• Capital markets:
  • Triparty collateral management
  • Delivery-versus-Payment (DVP)

Each of these use cases has active POCs deployed on Ethereum and Hyperledger. Blockchain POCs could potentially use additional technologies. For example, skip trace could be deployed in concert with Wipro HOLMES Artificial Intelligence Platform, to engage predictive analytics on where the skipped person may have gone to.

Business executives at clients are the primary buyers of Blockchain engagements. They are concerned with POCs which provide flexibility, quick deployment, and scalability. To facilitate achieving these goals, Wipro has been engaged in the following initiatives:

• Flexibility and Quick deployment: Wipro has been developing a set of use case frameworks to identify what works, including required technical tools, business cases, and product ecosystems. These frameworks of best practices codify learnings as well as challenges to rapid, effective deployment of Blockchain technology
• Scalability: Wipro has been a launch partner for the Enterprise Ethereum Foundation. In that capacity, Wipro has done extensive testing of scalability on various variants of Blockchain technology, including Ethereum and Hyperledger, which has provided it with the expertise to understand the possibilities and requirements for scaling a Blockchain solution for production grade enterprise level deployments.

Also, Wipro actively promotes and expands its Blockchain partnerships to broaden its capabilities in this rapidly developing ecosystem. 

Summary

The key to successful business use of Blockchain technology is the size of the network using the Blockchain. Network size is impacted by adoption, which is in turn impacted by cost incurred and potential value received. Successful technology services vendors must work on building that ecosystem with their clients for it to be successful. Technology services vendors will be able to have the biggest impact on cost reduction by reducing the ideation and buildout costs. However, insight into how technology interacts with business operations will provide precision into how value will be delivered. Value delivered is even more compelling for prospective network participants than cost issues in their decision process.

It will take several years for large-scale adoption of successful Blockchain ecosystems to be operational. The primary driver of successful adoption will be the development of large, effective ecosystems of participants. Technology services vendors have a large part to play in identifying a realistic roadmap and support the realization of that journey. 

This is the first in an occasional series of blog articles over the next year on Blockchain initiatives related to the financial services industry. Blockchain is an emerging technology for which there are no current operational deployments, with initiatives still primarily at the consulting and design stage. Pilots have been deployed, but are relatively rare despite the rapid growth in experimentation and POC trials.

This article focuses on Genpact’s Blockchain initiatives, leveraging its extensive F&A operations experience to develop Blockchain capabilities that can improve financial outcomes, customer experience and operations costs. Genpact has decided to focus on order-to-cash (O2C) processing to begin with because it has the following characteristics:

• Multi-party process, where coordination across parties for technology and process structure is currently lacking or customized on a bi-lateral basis, not on a universal basis
• Lack of consistent data structure and data management frameworks between parties
• Need to drive customer experience by providing operational transparency
• Impact of the process on financial metrics like cash flow and bottom line profits for a company.

Genpact believes any successful solution for O2C will have:

• Blockchain: distributed ledger, which will require counterparties to adopt a common taxonomy and technology platform. To encourage common adoption, it is necessary to minimize the cost and complexity of deployment and maintenance 
• Smart contracts: computer protocols that get triggered based on specific events and are programmed to execute a sequence of actions. Smart contracts aim to provide security and to reduce transaction costs through automation.

Genpact has started developing the solution for the manufacturing industry, given its experience and client base within this industry. The manufacturing industry is looking to reduce the high costs of O2C processing. Even with a focus on reduced costs for superior performance, adoption challenges would have to be addressed until use of Blockchain becomes industry standard. Successful adoption requires both the buyer (manufacturer) and the vendor (supplier) to adopt a Blockchain platform. To facilitate adoption, Genpact’s approach is to segment the client’s customers to identify the few large customers who would be more willing to adopt this transformative solution given its benefits, and for whom this will deliver a significant percentage of the overall benefits.

Banks’ involvement in the payments part of the O2C cycle would automate the end-to-end process value chain. However, adoption by the banks should be easier, due to high levels of bank interest in Blockchain initiatives. Banks will benefit from improved customer experience in their payments service, and reduced risk from disputed payments.

Genpact is developing the solution on the Hyperledger Blockchain platform, an open source collaboration hosted by the Linux Foundation. Design work is done primarily at client sites in collaboration with client teams, with solution development done by Genpact teams in Palo Alto, CA and Bangalore, India. Development teams work virtually with client teams when joint development takes place. Genpact is currently discussing and working with multiple clients who want to be early adopters to develop different POCs.

Blockchain adoption is growing very rapidly for business case development and POC trials. Full operational deployment remains a future aspiration for all vendors of this technology and supporting services. Domain expertise and opportunity prioritization are critical to getting Blockchain initiatives off the ground. Genpact has developed a strategy to go after a highly focused target market with a high value proposition for its Blockchain initiatives. Next, it will need to convert early experiments into compelling operational business cases to drive adoption and a successful business.