ibm blockchain usecase - nov 2016

1© 2016 International Business Machines Corporation IBM Blockchain

IBM BLOCKCHAINRamesh Gopinath, Ph.D. VP, Blockchain Solutions and Research


Blockchain is an emerging platform for transaction services�that will fundamentally change and reimagine the way we do business

ReducesTime

•  Capital Markets–  Securities trading /

settlement–  Syndicated loans,

Commercial paper•  Commercial Banking

–  Trade Finance–  Trade Logistics

PartyA’srecords

Bank’srecords

Auditor’srecords

PartyB’srecords

•  Inefficient•  Expensive•  Vulnerable

Digitally signed, encrypted transactions and ledger

All parties have same replica of the ledger

PartyA

Bank

Auditor

PartyB

•  Consensus•  Immutability•  Smart Contracts

•  Provenance•  Finality

T E C H N O L O G Y

I M P L I C A T I O N S

•  Retail Banking–  Payments: Cross border

remittances–  Lending: Mortgage

contracts•  Supply Chain

–  Provenance–  Logistics

RemovesCost

ReducesRisk

Enables NewBusiness Models


Key Concepts and Benefits of Blockchain for Business

Transaction time from days to near

instantaneous

Overheads and cost intermediaries

Tampering, fraud & cyber crime

Benefits:

Smart Contracts

Permissions Shared Ledger

Consensus

Ensuring appropriate visibility; transactions are secure, authenticated & verifiable

Business terms embedded in transaction database & executed

with transactionsAll parties agree to network verified transaction

Append-only distributed system of record shared across

business network

Key Concepts:

ReducesTime

RemovesCost

ReducesRisk

Enables NewBusiness Models

IoT Integrationinto supply chain


IBM’s point-of-view on Blockchain•  Open source standard to lower adoption risk•  Encourage Innovation through modular architecture•  IBM Supports Linux Foundation’s Hyperledger project

•  Privacy, confidentiality, auditability, performance and scalability. •  Engage with governments and regulators to encourage the broad adoption of

blockchain in industry

IBM BLOCKHAIN is conducting business in 2016 across three areas 1.  Community development of blockchain fabric (Hyperledger project)2.  Cloud deployment which expands Hyperledger with value added features3.  Client engagements and transformative solutions

•  •  Ensure greater trust by provisioning only permissioned members and users•  Enable more optimized forms of consensus to keep the ledger in sync

BLOCKCHAIN ≠ BITCOIN

BUILT IN THE

OPEN

PERMISSIONED

ENTERPRISE READY


CLIENT EXAMPLES

Trade Finance

BAMLHSBC

Identity management

Crédit Mutuel Arkéa

Food Safety

Low liquidity securities trading and settlement

JapaneseStock

Exchange

Settlements through virtual currency

MizuhoFinancial

Channel Financing

IBMGlobal

Financing

Contract Management

BTMU

FX Netting

CLS

Reward points management/IoT

CUP


IBM Blockchain in Financial Services SectorPAYMENT NETTING (FX) LOW-LIQUIDITY SECURITY TRADING

Provide efficiency and resiliency

across global FX markets in a standardized

manner

Reduce trade settlement time by

automating the end-to-end multi-party interactions for low

liquidity trading

LOYALTY POINTS

Build a peer-to-peer reward point trading system

between banks, credit card users, gift shops, for

seamless exchange of loyalty reward points

CONTRACT MANAGEMENT

Accelerate theDesign, Management

and Execution of Contracts among

business partners on the Blockchain


IBM Blockchain in International Trade and Supply-chainDOCUMENT WORKFLOWS

Manufacturers

Suppliers

Products

Track Others Track Back

Faulty Part

SUPPLY-CHAIN VISIBILITY

Automate current inefficient, manual and error-prone

workflows in documentary trade

finance

Provide single view for purchase order

life-cycle across the supply-chain as the truth

TRADE/SUPPLY-CHAIN FINANCE

Improve the efficiency of (our) commercial

financing business by sharing data in a

secure and transparent manner

SUPPLY-CHAIN PROVENANCE

Provide provenance across the supply-

chain cutting through complex distribution and

processing ecosystems


IBM Blockchain in Healthcare

HEALTH DATA EXCHANGE CLINIICAL TRIALS CONSENT MGMT.

Data Exchange across Health eco-system based on

patient centric control and consent

Patient consent management, data

capture and exchange based on consent;

enable compliance & auditability

PHARMA SUPPLY-CHAIN PROVENANCE

Provide a complete end-

to-end audit trail in the pharma

supply chain by serialization

CLAIMS AND FRAUD MANAGEMENT

Full audit trail of electronic medical

records, pharmacy, claims data, etc.facilited by data

exchange (above)


FINANCIAL SERVICES SECTOR


Develop a payment netting service to provide efficiencies and resilience to the foreign exchange market

Global market limited by:•  lack of standardized payment netting process for trades not

settled within the current CLS environment

•  institutions intervening manually to complete the process

•  inconsistent netting approaches, resulting in higher costs and increased intra-day liquidity demands.

CLS Group has partnered with IBM to release a payment netting service called CLS Netting. This will•  be used for buy-side and sell-side institutions’ FX trades that are

settled outside the CLS settlement service.•  have a Hyperledger based platform which delivers a

standardized suite of post-trade and risk mitigation services for the entire FX market.

“It (CLS Netting) is a significant step forward in

reducing risk and providing further efficiencies and resilience across the global FX market.”

David PuthCEO, CLS Group


Securities settlement in low liquidity markets

Today’s process

Settlement Process with Blockchain

Reduce trade settlement time by automating the end-to-end multi-party interactions from trade execution to settlement on the blockchain for low liquidity trading

Benefits1.  Reduced settlement time2.  Reduced settlement risk3.  Lower cost transactions


Loyalty points network with China Union Pay

Bank A Bank B

Gift Shop A

Identity Service

Gift Shop B

• Banks invest about $4B in credit card points market in China

•  Less than 50% points are redeemed

• Other rewards worth at $100B level

“At least Save $15M to build loyalty point exchange for banks by Blockchain Than Traditional Approach”

Unionpay Blockchain Leader, Mr. Yan. In the future , it can be for a larger Business Network: Airline, Super Market, Hotel, Car

Rental, Restaurant, etc


Typical Use Case Loyalty Points Exchange

Bank B 12,000 + Bank C 9,000 = Bank A 20,000

Channels to exchange points

Cross Bank Exchange

Transfer within Banks

Channels to redeem (online + offline)

online shops

stores

Scan gift and generate QR TokenSmart POS

Check available points

Scan QR Token on phone to request transaction

Complete


To examine the design, management and execution

of contracts among business partners using Blockchain technologies


INTERNATIONAL TRADE


Blockchain for Supply Chain VisibilityWhat?•  Prove out the ability of Blockchain technology to address key

supply chain visibility pain points•  Provide a single view and source of the truth regarding the

lifecycle of a Purchase OrderHow?•  Shadow Ledger capturing Buyer, Supplier, and Carrier EDI data

to the Blockchain with a web-based User Interface providing enhanced visibility

Purchase order

Carrier load

tender Tender response

Advance Ship Notice Shipment

Status

Blockchain

Visibility Portal

Retail

Trucking CompanyManufacturer

Blockchain


Blockchain Solution for IBM Global Financing (IGF)

What?Improve the efficiency of our commercial financing business by sharing data in a secure and transparent manner on Blockchain

How?•  Blockchain enables Comprehensive View of key

operational data: Purchase Order > Transaction Approval > Shipments > Invoices > Remittances

Benefits•  Fewer disputes & faster settlement•  Reduction in dispute resolution time: 40+ days to under 10

days•  Improved capital efficiency; freer flow of capital

orders

Partners Suppliers

products and services

IGF

IGF world-wide statistics4000+ Partners and

Suppliers

2.9M Invoices / year

$44B Financed / Year

$100M Capital tied up

any time!

25,000 Disputes /

year

$31K Avg. disputedinvoice value

44 days Avg. time to

resolve a dispute

Our Commercial Financing business provides working capital to IT suppliers, �distributors and partners through financing of inventory and accounts receivables


Improved Documentary Trade FinanceAutomate current inefficient, manual and error-prone workflows in documentary trade finance (e.g., letters-of-credit) via smart contracts on the blockchain

Benefits1.  Faster transactions with less complexity2.  Improved transparency and visibility => fewer errors3.  Lower cost of transactions

EXPORTER IMPORTER

Importer BankExporter Bank

RequestL/C

L/C : Letter of CreditCI : Commercial Invoice

Place Order

L/C

L/C CI

CI

CI

Distributed Shared Ledger

Exporter Bank Importer BankImporterExporter


Traceability/Provenance in Food Supply ChainsBuild a transformative end-to-end food traceability system, that cuts

through the complex distribution and processing eco-system, to provide provenance of food items across the supply-chain (“farm to fork”).

Benefits1.  Increased trust 2.  Pinpoint source of compromised food, reducing the unnecessarily broad recall3.  Improved co-ordination in food supply chain4.  Handle changing regulations easily using smart contracts

Supplier

Distributor

Consumer

Product

QR Code

Product Information

supply chain

…

Auditor


IBM Blockchain

IBM •  Invented the industries first Blockchain for

regulated businesses• Created the first decentralized membership

service for permissioned-blockchains, making it possible to comply to regulations (like the European Union Data Protection Directive).

• Pioneered blockchain platform as a service on Bluemix (one click is all that needed to spark a blockchain network) and

• Set the gold standard in security with the industries first high security network.


BACKUP


REG-TECH


Blockchain-Enabled Know Your Customer

Pain Point Solution Benefit

•  Redundancy: Most large FIs use similar data and processes to verify the same clients

•  Eliminate redundancy: Documentation needs to be verified only once before the approval information is shared

•  Inefficiency: Manual and time consuming process to gather and verify documentary evidence

•  Increase automation: Documents and approvals are digitized and can be verified without manual intervention

•  Lack of specificity: Requirements for due-diligence are often fuzzy, creating uncertainty on compliance to avoid legal sanction

•  Standardize process: Standardized, automated KYC processes sanctioned by regulators

Source: 2016 Know Your Customer (KYC) Independent Survey (Thomson Reuters)

Build a single but cross-business KYC platform providing employees with a consolidated view of all documentary evidences collected by any entity of Credit Mutuel Arkea Group, helping to reduce unnecessary duplication of information and requests.

ibm blockchain usecase - nov 2016

Technology