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Presentation_Outline_V14.pptxBLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Key points for Everyone:
We need to collectively put these slides and do it well for the guidelines provided. I have built outline on this draft and assigned respective slides for all of us to work on. Ensure that you are working on slides assigned to you only with your name mentioned on top of the slide.
The slides headers are mostly self explanatory and suggest you the content you need to bring in to the slide. Please also read the Group Assignment details at https://ucumberlands.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_134458_1&content_id=_2694187_1 whenever any doubt on the purpose of this exercise.
To ensure that our collective slides come together well, I have mentioned some key points to be taken care on some of the individual slides in this draft. Assigned owners are requested to take care of these points.
Bring in atleast 2-3 graphics/charts on your assigned slides. If you are using any existing, please ensure to mention the source along with the graphics/charts. Use Arial 16 pt. Font for all your text. Headers are 24 pt. Try to make slides look good, it is part of the grades.
Ensure to also add all your references on the references slide when you work on. You can cite the text on your slides as needed. References must be in APA format.
Ensure to turn around the slide as per the mentioned date on the plan. Please highlight asap if you need additional time however we are going to be running tight on time then.
Please note that the members not contributing will not be given credit in the submission. This is a group exercise and thus important for all of us to play our roles.
Please reach me at [email protected] if you have any questions or thoughts.
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BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Timelines planned to complete this exercise:
First completed draft from all slides owners by 10th Nov, Tuesday
Group do the peer review of the slides and share inputs/feedbacks to slides owners by 15th Nov, Sunday
Slide owners to do the necessary updates and finalize their slides by 21st Nov, Saturday
Group to meet over the call on 22nd Nov, Sunday if needed or finalize the presentation offline.
Submit the presentation by 23rd Nov.
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Finance and Banking – Payments : Blockchain Implementation BLCN 635 B01 Group Exercise Block Catalysts Team: 1. Sumit Kumar 2. Srija Kamidi 3. Zindy Maleeva Nengminza Sangma 4. Zhe Zhang
Finance and Banking Industry – Overview
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Zhe Zhang
The Ethereum blockchain can realize a more open, inclusive and secure business network, a shared operating model, more efficient processes, reduced costs, and new products and services in the banking and financial fields. It enables digital securities to be issued in a shorter period of time at a lower unit cost and has a higher level of customization. Therefore, digital financial instruments can be tailored to the needs of investors, expand the market for investors, reduce the cost of issuers, and reduce counterparty risks.
Today, trade financing is large, costly and time-consuming. Financial institutions and fleets have been trying to use blockchain to create smart contracts between parties. Some companies use the blockchain's wait-and-see strategy to track other companies in order to move forward at the right time. This is becoming more and more dangerous.
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Finance and Banking Industry – Key Players Worldwide
Zhe Zhang
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Financial Blockchain Shenzhen Consortium (Fisco)
FISCO (Shenzhen Financial Blockchain Consortium) is a non-profit organization dedicated to exploring the use of blockchain for financial applications. It is led by more than 20 financial institutions and financial technology companies. It was established on May 31, 2016.
R3 Limited
R3 is an enterprise software company that is leading the transformation of the digital industry. They provide dedicated distributed ledger technology for all types of enterprises in all industries. Corda, an enterprise blockchain platform developed in collaboration with our ecosystem of more than 350 institutions, is transforming the entire industry through processes and systems that digital companies rely on to connect and transact with each other.
Amazon.Com, Inc.
Amazon Managed Blockchain eliminates the overhead required to create the network, and automatically scales to meet the demands of thousands of applications running millions of transactions. Once your network is up and running, Managed Blockchain makes it easy to manage and maintain your blockchain network. It manages your certificates and lets you easily invite new members to join the network.
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Finance and Banking Industry – Key Challenges Faced By The Business and The Users
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Environment Costs
Blockchain relies on encryption to provide security and build consensus on distributed networks. This essentially means that in order to "prove" that a user has the right to write to the chain, complex algorithms must be run, which in turn requires a lot of computing power. Of course, this comes at a price. Last year, taking the most widely known and most widely used blockchain as an example, it was said that the computing power required to maintain the operation of the network consumed energy equivalent to that consumed by 159 countries in the world.
Lack of Regulation
Since many people investing in Bitcoin or other cryptocurrencies for the first time in the past few months have discovered the cost, this is a very volatile environment. Due to lack of supervision, fraud and market manipulation are common. In one high-profile case, Oncecoin, which was once a Ponzi scheme, is believed to have robbed millions of dollars from investors.
Complexity of Implanting
Technologists talk about replacing middleman facilities traditionally provided by the financial services industry, such as clearing payments and preventing fraud. But for many people, banks provide end users with good enough services at low enough prices.
Slow and Cumbersome
Due to its complexity and the distributed nature of encryption, blockchain transactions can take a while to process compared to "traditional" payment systems such as cash or debit cards. Bitcoin transactions can take several hours to complete, which means there are inherent problems.
Zhe Zhang
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The Critical Industry Issue To Be Addressed With Blockchain
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
| Category | Mitigation Plan |
| Cost Efficiency For Payments | Cross border transactions and expensive Banks across the borders may not have direct relationship, requiring intermediaries institutions adding to the transaction fees for the user |
| Payments Settlement Times | Cross border payments tend to take anywhere from two to five days The timezones, funds settlement time etc. can have the impact on the final transaction outcome sometimes putting users to disadvantage |
| Security Concerns for Payments | There are numerous instances of the payments transactions being cyber interrupted The lack of encryption makes the transaction records more vulnerable to the cyber attacks |
| Transparency Needs | There are extensive regulatory reporting and auditing activities to be managed in the payments industry leading to higher cost for the institutions The transparency and compliance needs vary across the regions and can be very cumbersome |
| Increasing Need of Innovation and Competition | The customer pain points including high transaction fees, high turnaround time along with businesses pain points like high operation cost, increasing auditing needs must be addressed The traditional business models are going to be falling apart with changing users expectations and behavior |
Payments industry has been consistently recognized for the strong need of radical transformation for the reasons mentioned below.
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Why Blockchain Adoption Is Becoming Important For The Payments Industry
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Here is the snapshot of how Payments Industry is evolving impacting their business and revenue model.
The Payments industry not only need to address these transitions but also prepare itself for changing demographics, user behaviors and expectations with the use of the emerging technologies.
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How Blockchain Decentralize The Payments Industry – Basic Overview
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
The blockchain technology enables the framework where data or information is not owned by one single entity and instead available with all entities participating in the network.
Today, banks keep all the information with them and rely on intermediaries for settling the transactions among them resulting into slower, costlier payments systems.
With the blockchain adoption, the banks will be referring to single source of the truth and be able to process transactions payments without the use of the intermediaries as well as almost real time.
The figure on the right provides a simplified illustration of how the centralized and decentralized set up differentiates for the payment industry.
Figure - An illustration of the centralized and decentralized set up for the payments industry
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Blockchain Addressing The Issue of “Lacking Cost Efficiency” In The Payments Industry
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Blockchain with it’s characteristics of immutability, distributed ledger provides new ways of making cross border payments. Integration of the crypto currencies in the solution in different models can make remittances almost instant and significant cheaper.
The two primary models for transforming existing traditional way of handling remittances are:
• Use of cryptocurrencies or stablecoins for transactions
• Use of cryptocurrencies or stablecoins as an intermediary currency or a bridge asset
There are various digital currencies like Bitcoin, Ethereum which can be used for the transactions.
There are projects like Ripple, Stellar and others which are providing the solutions for bridge assets to facilitate payments over the blockchains.
Source: (OECD, 2018[38]) OECD blockchain primer. https://www.oecd.org/finance/OECD-Blockchain-Primer.pdf
Comparing Traditional Payments Transfers and Blockchain Based Transfers
There are challenges like bitcoin volatility can cause issues however the ongoing initiatives around stablecoins and possible central bank digital currencies as bridge assets have potential to address these challenges in short term itself.
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BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Blockchain Addressing The Issue of “Settlement Times” In The Payments Industry
The current payments settlements are driven by batch-based processing at the end of the day. The payment settlement times varies from 24 hours to few days depending on various factors.
Blockchain however can reduce the settlement time significantly. Blockchain settlement process is a three-step process:
Sender initiates transaction sending crypto-currency instead of credit/debit cards
Transaction is sent to the mempool and validated almost instantaneously. Ripple network takes seconds while bitcoin network can take upto an hour.
Once the transaction is validated, the receiver receives the amount in form of the crypto currency.
The payments settlement can be much cheaper to process, much faster than the traditional networks and more secured with blockchain security characteristics.
Traditional Payments – Batch Processing Based – Longer Settlement Time
There are few challenges though which also need to be addressed inclusive of value volatility of the crypto currencies, limited adoption by the businesses for their lack of understanding of the technology. Some of these challenges can be addressed through the use of the cryptocurrencies pegged to stable coin which is rapidly being developed worldwide.
Blockchain Based Payments – Near Real Time – Much Shorter Settlement Time
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BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Blockchain Addressing The Issue of “Security Concerns” In The Payments Industry
Source: https://yourstory.com/mystory/how-can-you-secure-online-payments-using-blockchai-j1uu8n3t18
The traditional payments systems have been known to be vulnerable to many cyber attacks. Blockchain with its security characteristics resolves most of the challenges specifically with the crypto currency and wallets usage.
There are various benefits blockchain offers:
The identity privacy is high and unbreakable on many networks
The use of private and public keys combination ensures that transactions payload remains secured throughout and wallets cannot be broken by attackers
The data immutability provides the protection against any tampering in the transactions data
Blockchain based payment systems bring all these characteristics into play thus protecting the payments transactions as well as all the payments data over immutable ledger.
There are open challenges like ensuring the safety of the wallet keys, possibilities of miners pools collaborating to attack the networks, data correlation for breaking privacy and few others. Most of these are already being addressed in the next generation of the blockchain networks being launched or the upgrades to the existing blockchain networks though.
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BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Blockchain Addressing The Issue of “Lack of Transparency” In The Payments Industry
Regulators are recognizing the transparency blockchain provides across worldwide payments networks
Payments industry continues to grapple with the transparency issues arising from factors like payments qualifying as money laundering, regulatory compliance issues like GDPR etc. Regulatory agencies have been looking for increased transparency and Blockchain addresses this in many ways:
Immutability on the ledger provides the trust on the data much required by the regulatory agencies
Networks can also provide the view only access to the regulatory agencies for them to be able to monitor the transactions real time
The sidechain or offchain solutions can be used for ensuring compliance with regulations like GDPR though this is still under development
Payments without intermediaries reduces the touchpoints where the data can get tampered and provides better control to the regulatory agencies
There are some factors which need to be further advanced though. This includes capability to associate transactions with individuals (goes against the privacy philosophy to some extent) for the regulatory agencies, ability to apply regional laws on the global blockchain payment networks and others. These go beyond the technology challenges and need wider participation from the payments industry (being seen on adoption of Ripple, R3 etc.)
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BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Blockchain Addressing The Issue of “Slow Innovation” In The Payments Industry
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Payments industry is seeing rapid innovations fueled by blockchain based projects after decades of slow innovation. The key dimensions being addressed through innovations are:
Reduction of intermediaries and increasing the speed for the transactions. Smart contracts are fueling this changes mostly.
Speed up the back office transactions as well where traditional systems continue on the front end. Projects like Ripple are seeing adoption
Build the better transparency for the engaged regulatory agencies. Projects like Peernova are driving this.
Securing payments is getting easier with blockchain and it’s characteristics. Projects like Rivetz are leading this change
Payments in coming years is expected to be a very different play backed by blockchain adoptions. This will address the needs of users, businesses and regulatory bodies better than what the current traditional payments systems can.
Source - https://www.startus-insights.com/innovators-guide/10-blockchain-startups-disrupting-the-financial-services-industry/
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Impact From The Blockchain Addressing The Issue
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Sumit Kumar
Source: (OECD, 2018[38]) OECD blockchain primer. https://www.oecd.org/finance/OECD-Blockchain-Primer.pdf
Implications of the Blockchain Technology For Business Models In The Payments Industry
The figure above demonstrates how the different characteristics of using blockchain for the Payments industry can be shaped up into 4 different thoughts around how business models will evolve for Payment industry. These can be summarized as:
Blockchain enabled services – Indicates how P2P networks, smart contracts will change the way payment services are provided while making some of the services obsolete along with it.
Changed financial structure – The changes in the financial models, revenue generation methods, cost minimizations will change the way Payments industry looks at making revenue today.
Potential for business models – Payments industry will see new business models emerging with adoption of blockchain technology. Some of the existing business models may not even continue.
New market players – Fintech firms will gradually become the significant players in the payments market. They may stand up on their own or even enable the existing banks to change their services and business models around payments industry.
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Cost Associated With The Innovation
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Zindy Sangma
Consider the innovations in payments industry specifically with the blockchain, research accordingly please for this.
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Challenges (Technical) Expected In Implementing Blockchain
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Zindy Sangma
Look for challenges in implementing blockchain for Payments use cases
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Challenges (Non-Technical) Expected In Implementing Blockchain
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Zindy Sangma
Look for challenges in implementing blockchain for Payments use cases
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Existing Initiatives/Success Stories From The Industry
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Srija Kamidi
Bring 2 slides:
Summarizing key success stories from the industry based on research
Summarize key projects which are trying addressing Payments challenges with blockchain (projects like Monetha and others)
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Final Summary
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Srija Kamidi
Summarize that why the solutions proposed are the best solutions to address the challenge (can be done once we have the solution slides ready)
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References
BLCN – 635 – B01 Group Exercise : Block Catalysts Team Work
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Everyone to add their references
Anon. 2019. “Global Payments Report 2019: Amid Sustained Growth, Accelerating Challenges Demand Bold Actions.” 33.
Furst, Karen, William W. Lang, and Daniel E. Nolle. 1998. Technological Innovation in Banking and Payments: Industry Trends and Implications for Banks. SSRN Scholarly Paper. ID 1988490. Rochester, NY: Social Science Research Network.
Holotiuk, Friedrich, Francesco Pisani, and Jürgen Moormann. 2017. The Impact of Blockchain Technology on Business Models in the Payments Industry.
Isaksen, Marcus. 2018. “Blockchain: The Future of Cross Border Payments.”
Sara, CASADEVALL BELLÉS. 2020. “Can Blockchain Technology Reduce the Cost of Remittances?” 36.
Holotiuk, Friedrich, Francesco Pisani, and Jürgen Moormann. 2017. “The Impact of Blockchain Technology on Business Models in the Payments Industry.”
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