Blockchain – A new revolution in the Technology World

Blockchain revolution

Technology is changing every walk of life including business, financial transactions and the entire World. For instance – innovation of the Internet protocol suite (TCP/IP) has standardized the networking protocol and at the same time it revolutionized the voice and data communication. Hyper text transfer protocol (HTTP) became the most common language between clients and servers.  And now, is the turn of  ‘Blockchain’ protocol, a new entrant in the technology block. Blockchain would rewrite the way transactions happen and revolutionize the world of economy.  While TCP/IP is a communication protocol, Blockchain is a value exchange protocol.

What is Blockchain?

Blockchain is chain of digital signatures and just another kind of database for recording transactions – one that is copied to all the computers in a participating network. Data is stored in fixed structures called the “blocks”.

Features of Blockchain

  • Transactions are grouped into blocks – called the block chain
  • Transactions are grouped based on time
  • Each block points to the previous block (single parent)
  • Keeps the entire transactions secure
  • Each block contains new confirmed transactions
  • Old transactions or old blocks are never removed like Bitcoin Blockchain contains all transactions since Jan 3, 2009.
  • Blocks – can be created by anyone

Now, let’s understand Blockchain in very simple terms.

Scenario 1: I have a pen and I give this pen to you. The transaction happened does not require any 3rd person verification. I can’t give this pen to someone now, as I have already given it to you and you have the full control of it.

Scenario 2: Now, let’s think that instead of pen, I have a digital pen (say pen image) and I share it with you electronically. Digital exchange is slightly complicated because – Is there any way that you can find out that I have not created copies of it or have not shared it with anyone else but you – perhaps NO. This is technically called double-spending problem.

Now, let’s see how Blockchain addresses this problem – Blockchain creates a distributed ledger. All digital or electronic exchanges go into this ledger and are tracked and someone will be an incharge of the same. If that ledger is only with you and me, I can still cheat. However if the ledger copy is with everyone and all transactions are recorded, there is no chance of my duping you. It is not controlled by one person, so no one can cheat. Rules of the system are defined in the beginning in the blockchain code.

Here, also trust could be broken and colluders could rewrite historical records or create local records regardless of other parties’ interests and protests. Other parties may not even detect that colluders altered the historical record.  There are many mechanisms to address this problem as well, one is called proof of stake or proof of work. We will take this topic in our next blog on the same subject.

Irrespective of the type of blockchain, all have the following attributes

  • Decentralized and digitally distributed across computers in almost real time
  • Uses many participants to reach consensus
  • Uses cryptography and digital signatures to prove identity
  • Blockchain has mechanisms to make historical records editing hard
  • All transactions are time-stamped
  • Blockchain is programmable

Types of Blockchain

  • Public Blockchain
    • Permission-less
    • Anyone can read from or write data to the ledger if appropriate software is being used.
    • Parties to transaction can be anonymous
    • Typically requires additional mechanisms to arbitrate disputes among participants and protect integrity of the data
    • Secured by cryptoeconomics
    • Added complexity
    • Fully centralized
    • Public blockchains are open, and therefore are likely to be used by very many entities and gain some network effects

e.g. bitcoin

  • Private Blockchain:
    • Permission-less
    • Permissioned or trust based
    • Participants are known, trusted and have permission to update the ledger
    • Read permissions can be public or restricted
    • Transactions are cheaper due to lesser validating nodes
    • Nodes are trusted to be well connected and faults can be quickly corrected
  • Consortium Blockchain
    • Permissioned or permission-less
    • Consensus process is controlled by pre-selected set of nodes
    • Partially decentralized
    • Hybrid between low-trust provided by public block-chains and single highly trusted entity model of private block chains

It is difficult to monitor asset ownership and transfers in a trusted  business network – this is inefficient, expensive and vulnerable. However blockchain provides a solution by providing a shared, permissioned and replicated ledger which provides consensus, proves the transaction is immutable and is final

Challenges

  1. Currently this technology can process 4-7 transactions per sec. whereas current digital transactions happen 10K X times more
  2. Fragmentation
  3. Regulations are under scrutiny

Seeing the value of Blockchain, deputy governor of RBI, HR Khan announced that central bank may soon setup a committee to study the use of ‘Blockchain’ technology to reduce the use of paper currency. This statement came on 24th June 2016. RBI, IDRBT (Institute for Development and Research in Banking Technology) and people from industry would work on this. Similar statement came from Rama Gandhi, Deputy governor on 19th July, in 12th IDRBT awards in Hyderabad.

Though Blockchain is a new, non-conforming disrupter, government is quite open and willing to explore this, as it has got a tremendous potential.


AEPS – Leading a Way to New Age Banking

Aadhaar Enabled Payment System

What is Aadhaar Enabled Payment System?
Aadhaar Enabled Payment System or AEPS is a payment service developed by the National Payments Corporation of India (NPCI) allowing banks, financial institutions to use “Aadhaar” number and online UIDAI authentication for transactions through their respective Business correspondent service centres. AEPS, a new age banking service has been approved by the Reserve Bank of India (RBI).

AEPS functions through the National Financial Switch of NPCI, which is also used for routing interbank ATM transactions and Interbank Mobile Payment Service (IMPS).

Aadhaar – a key enabler as a part of JAM (Jan Dhan Yojana, Aadhaar and Mobile) plays a key role in AEPS.

What does a customer need for doing transactions under AEPS?

The inputs required by the customer to do a transaction under this scenario are:-
1.  Issuer Identification Number (IIN) – It is a unique, six digit number issued by NPCI to bank. Previously known as BIN or Bank identification number, IIN identifies the bank to which the customer has mapped his/her Aadhaar number.
2. Aadhaar Number
3. Fingerprint captured during their enrollment

AEPS

What are the key objectives of Aadhaar Enabled Payment System?

Key objectives of AEPS, as per GoI and RBI are

  1. Empowering the customer to use basic banking functionalities such as balance enquiry, cash withdrawals, cash deposits and Aadhaar to Aadhaar funds transfer, remittances across banks (both intrabank and interbank) using his/her single identity i.e. Aadhaar.
  2. Enhancing financial inclusion
  3. Facilitating the disbursements of various schemes like NREGA, MGNREGA
  4. Digitization of retail payments and thus assisting in financial policy making
  5. Interoperable, safe, convenient, secure service offering full range Aadhaar based banking solutions.
  6. NPCI to act as a central switching and clearing house for Aadhaar initiated banking transactions

What are the Pre-requisites for using AEPS?

  1. A resident of India holding an Aadhaar number and having a bank account may become a part of the Aadhaar Enabled Payment System.
  2. Customer needs to have a bank account linked to his/ her Aadhaar number with bank offering AEPS services
  3. In case of multiple accounts linked with Aadhaar, only primary account will receive all the AEPS transactions
  4. There is no separate registration or enrollment required for AEPS if bank account is linked to Aadhaar number. However, if the bank account number had not been linked to Aadhaar at the time of Aadhaar enrollment then customer has to approach his/her bank for linking bank account with Aadhaar number.
  5. Beneficiary customer should also have an Aadhaar (UID) number linked with any bank, with which they maintain an account (bank should be a part of AEPS network) and in which he intends to receive the credit.
  6. AEPS transactions can be initiated during the business hours of the respective BC centre of the sponsored bank.
  7. Minimum balance for AEPS transaction is decided by the respective bank where customer has the Aadhaar linked bank account number

How does the safety and security of AEPS transactions ensured?

AEPS is a safe and convenient channel enabling micropayments. Every terminal (MicroATM) has the encryption as per UIDAI norms & in case of any deviation, transaction will get rejected with an error code as “invalid encryption” on the terminal.

AEPS only supports real time online biometric verification using the Aadhaar number. The fingerprints/biometrics submitted during the enrolment of the individual need to match at the UIDAI server end to make any transaction successful.

How can customer check if his Aadhaar linked bank supports AEPS?

Customer can check the details on www.npci.org


eKYC – Faster, Better & Secure Verification Process

eKYC - Faster and Secure way to Know Your Customer

Shyam wants to travel the world and he wants to get a passport created – Passport office would want him to establish his proof of identity and address (PoI and PoA or PoR). Sana has taken admission in a reputed University, she needs a mobile phone in order to be in touch with her parents. TRAI mandates the PoI and PoA for new mobile SIM connections. Gaurav shifted to Bangalore and wants to apply for a gas connection – again he needs to establish his identity and address. Charu has got a new job and her company will transfer her salary into a bank account. For opening a bank account PoI and PoA are required.

We talked about 4 people from different strata with different requirements but one thing in common – a requirement to establish their identity and address. Organizations/ financial institutes / banks call this KYC (Know Your Customer) and KYC norms are mandated almost at every place of importance.

You would have found yourself in a situation where you are either scanning your passport, ration card etc or taking physical photostats as poof of your identity as KYC is majorly a paper based process at most places till now and is really a big pain.

The Bharat part of India is still ok with paper based process, however the Digital India is demanding a change and freedom from paper based KYCs. Apart from being paper based, the process is time taking and error prone. Paper based KYCs undergo OSV (Original Seen and Verified), validation of documents for validity, followed by manual punching in the systems for future retrieval and reference. Imagine a situation, where your particulars have changed and you have to follow the same lengthy process again.

In 2006, Planning Commission unveiled its vision for having a Unique Identity for each Indian. Under the leadership of Nadan Nilekani, wave of Aadhar Card was started with UIDAI (Unique Identification Authority of India).

Unique Identity is called UID, that aims to become a single proof of identity for every Indian just like SSN (Social security number) for Americans. With UID, GoI intends to replace paper based KYC with Aadhar based KYC which is known as eKYC. eKYC is based on authentication modes like-

  • Biometrics (fingerprints),
  • IRIS scans and
  • OTP

eKYC is not only paper less, secure, safe but almost error proof and quick. Your identity and address are verified electronically which will reduce KYC process from weeks to few minutes.

eKYC is an important initiative under JAM (Pradhan Mantri Jan Dhan Yojana, Aadhar and Mobile enablement) providing service to the unbanked population within country.

How eKYC works?

For Users

    • When availing e-KYC service, individuals have to authorize the Unique Identification Authority of India (UIDAI), by explicit consent, to release identity or address through biometric authentication to the bank.

For Organizations

    • Organizations wish to use eKYC service will first have to get approval and authorization from UIDAI. Once approved these organizations will be called KUA (KYC user agents).
    • For verification, these KUAs will have to use biometric scanning devices approved by UIDAI and register the device with UIDAI for accessing the data through the device.
    • Information can only be pulled from UIDAI with the consent of the customer. Authentication can be done by sending OTP on a registered mobile number. Once authorized, details of customer are shared back with organization by UIDAI service.

KUAs then just need Aadhar number and customer’s biometric scans (fingerprints through biometric scanner) to fetch customer’s details such as – full name, address, date of birth, mobile number, gender and photograph and will also access and copy all the KYC documents from the UIDAI servers. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification.

Spice Digital’s participation in eKYC

Very shortly people can provide their UID or Aadhar number and fingerprint impression on a biometric scanner provided at Spice Money outlets for sending the money to their near and dear ones without getting into hassles of carrying physical documentation.

Spice Digital is approved PPI and approved KUA which is operating its services under the brand name Spice Money.


Big Data for Actionable Insights

Big-Data-Analytics-Insights

Big Data and Analytics is the new 21st century gold rush and will impact every single business entity. In the time to come, the Knowledge and the Actionable Insight generated from Big Data and Analytics will overcome a sense of disenchantment and give business a competitive advantage. Business houses can leverage data in new ways, understand its hidden potential to further fine tune their strategies.

But the question is – What is this Big Data all about?

Big Data is often defined by 3Vs – Volume, Velocity and Variety.

In simple words, Big Data is an incredible amount of data (usually Terabytes, Petabytes or more), coming at an alarming or extremely high speed and which can be in structured (like data in your excel sheets defined by rows and columns) or semi-structured / unstructured form (like your Facebook posts and Twitter tweets).

biganalyticblog800

Stats show that 2.5 quintillion bytes of digital data is being generated every day, data doubling itself every 1.2 years.
Big Data made waves in the analytics space because existing as well as traditional tools, techniques and infrastructure are incapable of handling this large volume and complexity of data. Hence, the term “Big Data” has expanded not only to include data but the set of technologies to capture, store, manage and analyze large and varied collection of data to solve complex problems.

Apart from this, with Internet of Things (IoT) gaining momentum, Big Data hype has grown even bigger. According to Cisco, IoT will be generating 400 zettabytes of data by 2018. In spite of all techniques and tools in place, capturing and analyzing this much volume of data is going to be a huge challenge. Presently we are able to analyse only 0.5% of the entire data generated.

At the same time, it is very easy to get overwhelmed by the term “Big” in Big Data, however the need of the hour is “Smart” Data. Once unlocked, the structured data is highly beneficial to take strategic decisions.

Big Data Management deals with 3 major challenges:

1. Strategy: Looking at new ways to use information to drive growth
2. Data Analytics: Drawing insights and trends and using this for decision making
3. Management: Controlling 3 Vs adopting process efficiencies

Big Data Opportunity in India

Burgeoning size of digital information triggered by social media, ecommerce, banking and 900 million mobile connections out of which 100 million are data users is resulting in 83% of annual growth rate of Big Data in India.

Big data has found vertical market applications, ranging from fraud detection/risk management to scientific R&D, along with proliferation of data from multiple real time sources.

Horizontal Submarkets for Big Data

– Storage & Compute Infrastructure
– Networking Infrastructure
– Hadoop & Infrastructure Software
– SQL
– NoSQL
– Analytic Platforms & Applications
– Cloud Platforms
– Professional Services

Vertical Submarkets for Big Data
– Automotive, Aerospace & Transportation
– Banking & Securities
– Defense & Intelligence
– Education
– Healthcare & Pharmaceutical
– Smart Cities & Intelligent Buildings
– Insurance
– Manufacturing & Natural Resources
– Web, Media & Entertainment
– Public Safety & Homeland Security
– Public Services
– Retail & Hospitality
– Telecommunications
– Utilities & Energy
– Wholesale Trade
– Others

Hurdles and Prospects of Big Data and Analytics projects

While all the hypes are true and need is indeed there, however 99% (Yes you read it right!) of Big Data and Analytics implementation fail. The top 5 reasons for same are:
1. Failure to define use case in objective terms
2. Failure to use right technology
3. Failure to focus on business requirements first, technology next
4. Failure to leverage all available data sets and assets
5. Failure to effectively use power of advanced analytics

Hence, not only technology but the people are the key drivers for Big Data and Analytics space. Most of the organizations are making investments on building human capital, people who know tools, business problems and techniques to solve complex problems. This has led to birth of new profile “Data Scientist” – which is one of the hottest skills to have in industry as of now.

Keep watching this space for more on Big Data, Analytics, Data Scientists, Machine Learing and much more.