Commentaries and insightful analyses on the world of finance, technology and IT.

November 23, 2015

Apply intelligence where it is needed the most

In my previous blog, we talked about letting the CAT out of the bag in order to make risk management more effective. The 'T' we talked about previously was 'transactions,' the other two being 'customers' and 'accounts.' With the increasing number of channels of monetary transfers - both bank-regulated as well unregulated, anonymous ones, such as Bitcoin - to scan each transaction, especially in a pre-facto scenario like anti-money laundering (where the decision making is required, prior to approving the fund transfer), becomes too daunting a task.

In a post-9/11 world, which brought financial institutions to focus on monitoring transactions in order to curb finances of terrorist organizations, the regulations and the know-how required to put them in place is still inadequate (Ref: American Bankers Association). However, good data sets can help address this. Considering the fact that it is not only a select few states funding such organizations, but also a list that includes legitimate charitable organizations and individuals as well, acting as fronts and providing monetary sustenance to them, the need for intelligent predictive and prescriptive analytics is evident.

The days of relying on plumbing are over. Banks today need intelligent and integrated platforms. A move towards big data and analytics is an obvious start, but the required ingredient here, is good data that is intelligent and that paves the way for the subsequent application of this inherent intelligence.

The technology architecture, and specifically the product suites of the modern world, allow strong and seamless integration capabilities through which, data can be sourced into a landing zone. For example, Hive can provide users limitless capability to slice and dice the data, build analytical dashboards, and develop management reports using sophisticated suites like Tableau and Microstrategy. This can be the foundation for further intelligent analytics. One way to achieve this is by establishing loopbacks at every step in the integrated chain, so that the data is enriched continuously, and made more meaningful.

One user group of such data is the operational front and the other the associated central organizations like FINCEN. The vision is to provide both these user groups with as much intelligent information as possible, in order to improve the decision making, risk scoring, and monetary tracking; by enhancing the rules and scenarios with the loopback mechanism.

All that has been achieved with the continuous efforts of the financial industry around the world needs to be implemented a bit more intelligently. The enemy in discussion here is smart enough to create fronts that look completely legitimate, and runs a dark world covertly and intelligently. The statistics teams that build scenarios to scan transactions, need more enriched, real-time data, with a loopback into the system, so that the scenarios become more foolproof, assign better risk scores, and generate lesser false positives.

The legitimate organizations involved in such transactions could be visualized throughout their relationship lineage with the bank, and could be chopped off, thereby reducing bank losses, as well as involvement, and consequent liabilities (if any).

There is a dire need to build effective and productive data farms, in banks, that can link CAT, across its internal banking relationships and provide the bigger picture for every entity. While the cost of such a system may be high, the rewards will be even higher. Good data will not only drive better business analytics and revenues, but also catch illegitimate fund placements, predict their behavior through pattern analysis, and prescribe a course of action; thus safeguarding itself and humanity at large.

November 12, 2015

It's time for the banking Goliaths to take note of the nonbanking Davids!

Within ~1.5 years of the launch of its mobile maps app, Google had erased over 80% of the top GPS companies' market capitalization. Similarly, in just over seven years since venturing into the music space, Apple became the world's largest music retailer. History is replete with examples of new entrants - backed by technological superiority and innovative business propositions - wiping out established companies in almost no time. With this in mind, can established banks today say with any certainty that this won't be repeated in their industry? Today, more and more nonbanking organizations are foraying into the banking sector. Startups like Stripe and Square have earned multi-billion dollar valuations. Today, around one-third of U.S. revenue for Starbucks is paid via its own loyalty cards.

Banks' nonbank competitors span nimble technology players, telecommunications companies, start-ups, retailers, fintech firms, peer-to-peer lenders, crowd-funding websites, internet/mobile service providers, and many others. The threat of traditional banks getting relegated to the limited back-office utilities roles by the nonbanks is quite real. If you are still unconvinced, the three news stories below from the past few months may help change your mind.

By Aug '15, Europe's largest peer-to-peer lending platform, Zopa, had facilitated over £1 billion in loans to over 200,000 people. In July '15, it had experienced over 120% YoY growth in its lending business. Zopa by now has over 2% share of the UK's unsecured personal loans market.

In Mar '15, the Chinese e-commerce giant Alibaba, announced that it is developing facial recognition technology to enable mobile shoppers to substitute their passwords with selfies. Today, China's financial sector is experiencing immense transformation owing to innovative business models from major internet companies like Alibaba that are rapidly adopting microfinance with a digital edge. Alibaba had launched in China - a third-party online payment platform involving no transaction fees.

In Mar '15, the Chinese smartphone manufacturer Xiaomi moved into the financial services arena by enabling an interest-bearing mobile wallet account. Within couple of months, it also launched an online money-market platform - Xiaomi Huoqibao. Today, online money-market accounts are experiencing high popularity in China - thanks to their heavy promotion by the tech industry entrants and also because they offer substantially higher interest rates than traditional banks.

Whether it's lending, payments, cards, wealth management, insurance, or any other banking functions (except deposits where there are regulatory constraints for nonbanks); the nonbanks are making rapid strides. The following are a few examples:

1.Payments: Google, LevelUp, Apple, PayPal, Sage, Starbucks, Square, Walmart, Alibaba, WorldRemit.
2.Lending: Funding Circle, On Deck Capital, Lending Club, Amazon, Kabbage.
3.Money/Wealth Management: Nutmeg, Moven, LootBank
4.Mortgages: Zillow, Quicken Loans, loanDepot
5.Invoice financing: Payplant, InvoiceFair

So what gives these nonbanking players a competitive edge over the traditional banks? In my view, there are three key factors:

1.Digital superiority: Non-banks have aggressively proceeded with digital innovation, ranging from leveraging real-time predictive analytics, open APIs and ecosystems, multi-channel portals, ultra- automated decision engines, cloud, IoT, geo-location and biometric capabilities, and more. Unlike traditional banks who have typically managed their systems via closed structures like proprietary data and communication networks, nonbanks have been aggressively leveraging their APIs and related ecosystems to ensure openness. Zillow and Apple, for example, have a large number of APIs that let their partners integrate into their digital platforms. Similarly, nonbank SME lenders such as Kabbage, Fundera, OnDeck, have digital access to external databases that have a vast amount of information on SMEs. These lenders are capable of real time risk profile assessment using traditional as well as alternative data sources e.g. Yelp reviews, Quick Books entries, etc. Their cloud-based credit scoring capabilities and lending decision engines are underpinned by predictive models that leverage thousands of data points. Further, many new entrants don't follow the limiting linear digitization strategies of traditional banks. For example, Atom bank in UK started with the mobile banking only and planned to add internet banking capabilities only later.

2.Superior customer experience: Many nonbank entrants are globally successful digital companies who are capable of providing superlative user experience. Nonbanks have been proactive in enabling needs-based, simple, and hassle-free solutions to customers. They are capable of servicing market segments that traditional banks have been reluctant to service due to high costs or for other reasons. LootBank's offering of mobile money management with prepaid cards for students, Amazon's lending to its merchants, Payplant's invoice finance servicing for app developers are a few such examples. Nonbanks are able to provide value-for-money to customers. For example, PayPal offers select merchants fixed rate loans which get paid as a percentage of their daily business sales on Paypal, obviating the need for minimum monthly payments. In its foreign exchange business, Transferwise has enabled formidable pricing strategy. Many nonbanks have also seamlessly integrated their product merchandizing, media content, payments/ordering services and other key financial features into their digital channels - all of which are backed by a real-time personalized customer experience provisioning. Biometric authentication, beacons usage, one-click payments, social media integration, to name just a few, also aid in enabling superior customer experience. CityFalcon has leveraged Twitter to provide investment insights to traders; PayPal and Moven have aggressively leveraged their superior digital technologies to acquire tech-savvy millennial customers. Thus, it is no wonder that PayPal is the number one online payment service in many countries.

3.Agility and speed: Unlike traditional banks, digital nonbanks are not subjected to stringent regulatory requirements. Consequently, they can capitalize on this by aggressively innovating. Thus, their continual and frequent innovation, high risk appetite and operational productivity, and sharp focus on value-addition are part of their mantra. They release new innovative service/product with remarkable efficiency and speed and respond to customer needs much faster than traditional banks. PayPal and Square, for example, allow their merchants to start accepting payments within one day (almost a week faster than most traditional banks). OnDeck Capital can decide in less than 24 hours, the credit worthiness of a business customer, and it takes only two weeks or less for fund disbursement (with good number of loans getting disbursed within 48 hours!). QuarterSpot allows business owners to apply for loans online in just a few minutes. Similarly, the balance transfer between the Yu'E Bao investment account and Alipay account can happen in just one click.

I believe it's high time that traditional banks take note of the lessons in the David versus Goliath legend! Don't you agree?

November 5, 2015

Financial services slowly swings towards connected things

The tale of the rabbit and tortoise is known to everyone because it has been told many a time. If we draw an analogy in the business world, financial services (FS) would be the tortoise when it comes to adopting digital technology when compared to other industries.

As with most digital technologies, FS has been slow to embrace the Internet of Things (IoT) whereas other industries have taken to it as a duck takes to water and appropriated a space for themselves in the IoT world.

IoT is simply real-time communication and sharing of information between devices connected to the Internet. Though the definition is simple, the impact that it carries is profound because the information thus collected would be used to predict needs, solve problems, and boost  efficiency with the use of big data, analytics, predictive modeling, and artificial intelligence (AI). Some examples are Apple Watch, Google glass, and Nike+.
Though the FS industry has been slow to move towards IoT, the emergence of technologies such as wearable and sensors have the industry's interest piqued. So much so, that FS is one of the top ten industries investing in sensors for devices.

Apple Pay is one of the most quoted examples of IoT in FS. Another example is telematics, which is used to communicate information about the location of a vehicle, crash notification, and such other vital information to the driver, insurer, and the concerned authorities.

The entire ecosystem, which is being created by these objects with sensors, is bringing in a fundamental change in the way financial institutions interact with customers. With the use of technologies such as big data, artificial intelligence, and analytics, these institutions are beginning to get more personalized data about their customers, which in turn, help them tailor and offer their products and services in a more personalized form to the customer.

Ads, webpages, and product recommendation based on customer data bring convenience, which in turn create better customer experiences. With smooth transactions and continuous customer engagements at many touch-points, the business model and revenues are likely to see a more positive impact. That said, the moment one hops on to an inter-connected digital world, the hounds from hell come chasing to target security and privacy loopholes. This gives cybersecurity a whole new dimension for all the stakeholders involved in this world of IoT. With digital vulnerabilities expanding exponentially, the challenge of keeping the space safe is going to keep all concerned on their toes. The financial industry, already under severe attack would have to be doubly cautious and more prepared to ward off this challenge.

So should the rabbit of our story win? Perhaps continuing slowly and surviving is a better option than getting into a mindless race where survival itself becomes doubtful. Out running is not a choice for our slow friend, he can use the tracks left by his faster partner to be more prepared of the possible way-lays that may lie to hunt him. So slow and steady may not win the race but certainly, survive for another race.

October 26, 2015

EMV in the US: 'Swipe' Out, 'Dip' In

Losses originating purely from the use of magnetic or 'swipe' cards are pegged at $8.6 billion per year and many experts believe this figure could touch $10 billion or higher this year. Given this background, businesses shouldn't need much convincing to move to a more secure alternative. However, considering the figures above are that of US and it is the last major economy to move to EMV, that is,  chip cards that need to be 'dipped' into a machine for transaction, it seems to have taken  a lot more convincing than one would have deemed necessary. Better late than never, the US officially adopted EMV on Oct 1, 2015. It is a welcome decision as the US is home to about a quarter of all of the world's credit card transactions.

What took the US so long? If we look back, there have been two main causes that led markets towards EMV - the first being the objective to combat increasing card fraud, and the second, the lack of a robust telephony network. The latter presented the need for a system that could operate offline, such that the card and the terminal are able to allow settlements, without the constraints of the bank's system.

In the yesteryears, America was immune to both those factors. Fraud was more prominent in other markets and connectivity was better in the US than in most other places. However, over time, as other markets began to plug the holes in their defenses, fraudsters shifted their attention to the path that did not only offer the least resistance, but was also very lucrative - the US market. Thus, the US went from being impregnable, to most vulnerable.

Now that it is here, one aspect that is being largely discussed is the 'liability shift.' This essentially means that in case of a fraud, the party with the lesser technology would have to bear the brunt of the liability. From the 'carrot and stick' analogy, the liability is the 'stick', being used to encourage parties to adopt new technology and bring more harmony into the market through better coordination. This has made both the issuers and the merchants invest in the migration, simultaneously. If one migrates and the other doesn't, it would just lead to fraudulent activities shifting within the ecosystem, thus making the entire exercise inefficacious.

The associated costs and consumer adoption are two of the biggest impediments in the transition to EMV. The terminals that read chip cards can cost up to $1000 apiece, which may force smaller players to decide against adoption. However, issuers, such as American Express, have pledged financial aid to help smaller businesses defray the costs. Meanwhile, Square, a Silicon Valley startup, has announced that it is working on developing more affordable chip readers. Sooner these effort bear fruit that reaches the smaller businesses, the better it would be for the cause of secure transactions.

Additionally, there is the problem of customer behavior. However, they can be encouraged to move to new cards through demonstrations and offering certain benefits.

Yet another, but much bigger elephant in the US stores is Apple Pay that requires around 220,000 retail stores to add NFC capable terminals. For these merchants - having already adopted the Apple Pay terminal - the adoption of EMV terminal would be counterintuitive.

In spite of these challenges, EMV has started making headways in the US. But that doesn't mean it is the end - in fact, it is the beginning of a new struggle as fraudsters are likely to move to ecommerce and omnichannel merchants. Merchants' solutions to ward off these challenges and fraudsters fighting to disrupt such efforts should make this battle worth watching.

October 20, 2015

The future of utilities

Industry utilities are emerging as a welcome innovation in the financial services value chain. Their core proposition of disintermediating non-core functions to allow banks to focus on pure business-generating activities is resonating with an industry coping with siege on multiple fronts. But the path to large-scale adoption is still beset with a few key challenges, like regulatory approval for instance.

Regulatory consensus on the value of utilities is still to emerge, especially when it comes to functions like compliance and risk management, which are still viewed as core responsibilities of banks. Then there is the allied concern of defining liability and accountability in this new disintermediated model. It is clear that the pace of utilities evolution will be a function of the industry's ability to engage and collaborate with the regulatory community.

Concurrently, utilities will have to back up their proposition with strategies and structures that account for the practical concerns that still prevail. The focus will have to be on demonstrating that they can balance risk and value through well-governed organizations built on collaborative partnerships, clearly defined roles and responsibilities, and compliance with contemporary principles of security and privacy.

The primary task will be to develop a detailed implementation and operationalization roadmap. At the level of strategy this must address issues like shared vision, governance, risk management / transfer, to name a few. Then there are the technical and functional considerations of defining a utility's scope of service, its product/service strategies and the structural frameworks that will ensure privacy and security.

The roadmap must also include a coherent technology strategy including the expected evolution, say, from an enterprise platform to full-fledged utility via private cloud and SaaS phases. Continuous innovation must be an ingrained functionality, with the roadmap clearly demonstrating how customer value can be enhanced by adopting robotic process automation, robot advisors, NLP-based tools, self-service portals, self-learning systems, thin-trades, open technology platforms for regulatory reporting, and more.

Finally, utilities should offer a business case to customers that emphasizes the real and extended benefits of adoption over and above immediate cost savings. The long-term view should not only highlight the possibilities for accelerating cost savings but also the opportunities to enable productive financial engineering and strategic enterprise outcomes. But the most critical driver of adoption will be the industry's ability to engage with and accommodate the requirements of all stakeholders - banks, product vendors, infrastructure players, technology partners and regulators.

October 14, 2015

'Ification' of Games: Fiction, Fad, or Fact?

The year was 2011 and when scientists were trying to solve the puzzle - find the structure of an enzyme that helps AIDS-like viruses reproduce, for decades - in walked a few online gamers and lo! Behold! In three short weeks, they achieved what eluded scientists for decades. In essence, gamers found the required structure through their gaming skills. This is the most acclaimed example to exemplify the virtues of Gamification.

It was in 2004 that 'ification' was suffixed to 'game' and Gamification has continued to gain currency ever since. It is fundamentally, the art and science of applying mechanics of games to non-game situations, to elicit certain desired behaviors from users. It is used in businesses to make the scenarios more fun, to increase engagement.

Companies are using Gamification to change user behavior, solve real-world problems, and extend brands. It is also being promoted as a tool to keep the employees engaged so that their skills can be enhanced. The ultimate desire is to have these skills drive innovation.
With the emanations and evolution of gesture control technologies, along with augmented reality, Gamification is predicted to become an everyday thing in the years to come.

Even now, whether or not we notice it, Gamification is becoming ubiquitous. Most of us have profiles on social media channels such as Yammer, LinkedIn, Facebook, and Twitter. On these sites, we are encouraged to complete our profile details; the progress is shared as a bar on our profile page. The profile bar is a virtual representation of how complete your profile is, to not only inform us about our profile, but also motivate us to complete the profile; in essence, induce the desired behavior.

Traditional 'push' communication impact has been dwindling in terms of motivating the customer to take note and act. With Gamification, engagement is increased, through the elements and excitement of games, which helps in carrying the organization's message to the customer.

The engagement that is produced with Gamification is not only effective, but also sustainable because gaming is addictive. As customers become players, putting their energy and time into achieving goals, such as winning reward points, they are more likely to stay longer, which in-turn increases the possibility of bringing in more engagement with the brand.

Some might be fighting the doubt that such contests and promotions have been a part and parcel of businesses since the time they came into existence - so why is there the need for Gamification? Is it not just a fancy term to existing practices? The answer to this is, no. It is not an old practice in the cloak of a new term. It is actually an organic next-step or evolution. While promotion tries to entice audience through bait to trigger a desired activity, for instance, "Open an account, and get a chance to win an iPhone", the goal of Gamification on the other hand, is to entrench the products and services in the lifestyle of consumers. 

Thus, Gamification, as a tool of customer engagement, has transcended the fiction and fad stage a long time ago and is now a fact of life; as it is the shared purpose on the part of businesses and customers. This shared purpose is the driving force that strengthens this trend - and as long as the purpose of remaining shared exists, this crescendo will continue.

Blockchain Technology: Is it the next Wheel and Fire?

-by Kiran Kalmadi and Souna Uthappa

Wheels and fire are said to be the most important inventions in the history of mankind. Though we missed the events that led to these inventions, we are a witness to the events unfolding, which many call equally significant - the events that have made the blockchain, the most in-vogue term these days. The banking industry, which is no exception to this, has taken avid interest in this space. The who's who of banking is exploring and embracing blockchain - the technology behind bitcoin. Although bitcoins haven't made much headway in enticing the banking industry, the same can't be said of blockchain.

Blockchain is defined as a distributed public ledger, where all the activity is recorded across a decentralized network. Blockchain is made up of 'blocks' wherein the blocks are files where data is permanently recorded. As each block is completed, it makes way for the next block, and a block records all of the most recent transactions that haven't entered any previous blocks. A blockchain is therefore a perpetual store of records. These features of a blockchain can assist banks in many ways - reducing cost and risks, improving efficiency, increasing transaction speed, improving product offerings, and eventually improving customer experience. Banks are now looking at various use cases of this technology, independent of the bitcoin.

The current focus areas among banks remain mainly in the payments space (real-time payments, cross-currency transactions, P2P fiat currency payments, etc.), Trading and settlement, Securities asset servicing, Back-office operations, and B2B services. Banks across regions are exploring the blockchain technology space and the use cases are only going to expand with each passing day. For instance, Santander InnoVentures  (Fintech Investment fund of Santander) has identified around 25 use cases where blockchain technology can be applied.

Few of the banks currently exploring this space include Deutsche Bank, BNP Paribas, UBS, Barclays, Citigroup, USAA, Goldman Sachs, ANZ, Commonwealth, and Westpac. In addition, banks are also entering into agreement with Fintech startups or are investing in accelerator programs (Barclays, UBS, etc.) to launch new services or products that leverage blockchain. Very recently, nine of the world's biggest banks joined forces with New York-based Fintech startup R3 (R3CEV LLC) to create a framework for using blockchain technology in the financial markets.

The widespread interest that blockchain is attracting today, assures us of one definite trend - all major banks now believe that blockchain can add lot of business value. This is forcing banks to invest in blockchain technology and we believe that in the years to come, the adoption of this technology will be more widespread. It is no more a matter of 'If', but merely of 'when'. History alone is the best judge about the significance of an event and same is true of blockchain as well. However, it certainly has set the wheels of major change in motion and only time will tell if it can sustain the fire, which many claim has begun with this invention.

October 1, 2015

The value of financial utilities

There is straightforward value in financial service providers delegating mundane non-core activities to an emerging set of financial utilities. That was the key takeaway from my first post.

But financial utilities have the potential to enable a range of benefits extending beyond mere "chore-broking". For instance, they can deliver significant cost reduction, which in our own experience, could be as high as 60 percent of the cost per trade. More importantly, utilities enable banks to shift to a variable cost model where pricing may be linked to simple transaction volume, or to more complex business outcome-related metrics. Going forward, there is a huge business opportunity in such gain-share models.     

By taking on the stewardship of non-core activities, financial utilities enable banks to hone focus on pure business-generating activities such as sales, marketing, relationship management, bank-specific pricing, risk management and value-adding services. Banks are free to concentrate on building competitive advantage by accelerating time to market, improving service delivery and enhancing quality of output. Once the utility model reaches maturity, banks will also be able to simplify their technology architecture by leveraging "bank-in-a-box" standardized workflows.

As the utility model evolves, expect to see a variety of formats - from the inclusive and comprehensive SWIFT model to lighter 'single platform-single bank' variations. We will also see strategic variations in the way these utilities are conceptualized, developed and deployed. There is already the cooperative bank-driven strategy that created Clarient. Then there is also the possibility that a single institution will take on the onus of development and then offer it to the larger ecosystem. Or a third-party technology vendor might offer the technical backbone directly to a leading market player like say, DTCC. New utility models could even emerge from partnerships between technology service providers and leading product vendors.

But irrespective of the variations in partnership and structure, every utility will eventually be ratified on its ability to enable productive collaboration between all stakeholders including banks, product vendors, market infrastructure players, leading technology companies and probably even regulators. But given the fact that most regulators are still circumspect about how much utilities should be allowed to do, especially in areas like compliance and risk management, it will be interesting to see how their future unfolds.

We'll talk about that in my concluding post.

September 24, 2015

The rise of financial utilities

Successful banks typically run a tight ship, constantly on a quest to wring out some more cost and performance efficiency from already optimized operating models. In recent years, that traditional diligence has been pushed to its limit by the general economic gloom and consequent pressure on returns and revenues.  

Accordingly, more banks are now taking their efficiency scalpels to the realm of regulation and compliance at a time when the cost and redundancies involved in complying with KYC, AML and ever increasing regulation is coming under intense scrutiny. This is leading to the creation of entities like Clarient, a client data and documentation utility launched by a clutch of Wall Street banks together with the DTCC (Depository Trust & Clearing Corporation) that acts as a centralized hub for internal onboarding services and also helps banks manage a range of regulatory requirements towards KYC, FATCA, EMIR and Dodd-Frank. Other prominent examples include KYC registries from Thomson Reuters and SWIFT, which itself has more than twenty participating banks.

Interest in these industry utilities continues to rise. In fact, many of our financial services clients - especially mid-tier institutions with relatively higher costs per trade - have expressed interest in co-creating utilities for centralizing post-trade process servicing, KYC/onboarding, reconciliation etc.

The role and relevance of an entity that aggregates and abstracts common, undifferentiated activities into a packaged, readily consumable service is fairly obvious. By centralizing important but non-core and standardized functions, financial institutions can improve savings, transparency and control. More importantly, they can also become more agile in responding to the frequently changing dynamics of the regulatory regime.

We believe that over the next three to five years, utilities will evolve into a central role within the financial services industry. After all there is definitive value in the fundamental premise of releasing banks from the chore of non-core activities. But what about the role and value of financial utilities beyond that basic promise?

That's in my next.

September 7, 2015

Flip a Bit

A coin has two faces and which one shows up when it is flipped depends on probability. In a normal, unbiased coin, each side has a 50% probability of showing up. However, if we shift our attention to the coins that are in vogue and live only in computers, that is, bitcoins - we would observe that here, the probability of seeing the other side of the underlying technology used in bitcoins is substantially less than half.

The main technology used and talked about is the block chain. The goal of this technology, simply put, is to remove, as much as feasible, the people, their influence, and their interference from the methods of transferring money, contracts, data, and all such information where ownership knowledge is important.

So does this mean the technology, which is considered to be faster, cheaper, and more secure than other transaction methods, be only restricted to bitcoins? That has never been the case with anything of such importance, and it is not going to be this time either; new and more interesting uses of this technology are not only being ideated, but put to use as well. Take a guess what a Goldman Sachs-funded start-up working on block chain, would be used for? If you thought bitcoins, you thought wrong. The start-up tracks and protects the U.S. dollar using block chain technology.

Likewise, from music streaming, currency tracking, to a failsafe voting system, block chain is finding use in a legion of ways, in almost every industrial landscape. In fact, a mini-industry has started taking shape around this technology. In the first half of this year, $375 million has been raised by start-ups whose business model is based on the use of bitcoins and its underlying technology. The amount of $375 million is in half a year is actually 10% more than what was raised by starts-up with similar models in whole of last year.

But road to glory is never strewn with flowers, on the contrary it is usually filled with thorns. Keeping true to this rule, not all is rosy with blockchain technology, as it is still being considered a risky bet at best. There are technology and perceptional issues that are preventing block chains from becoming ubiquitous. One must also consider the vested interests, such as those of the retail banks that stand to gain from the processing delays and other inherent inefficiencies of current system. Blockchains are likely to wipe out the delays in processing as well as the profits banks gain from differences in fees and interest and other such lacunae but it would be arduous fight before industry as a whole and banks in particular concede to real-time processing technology.

In spite of such impediments, the march to popularity has started and over time, blockchain is sure to find more adopters, and this, in all likelihood, would start a virtuous cycle of more adopter, more technology, and more convenience, leading back to more adopter. It would be interesting to see if the underlying technology, i.e. blockchain, become more popular than overlying service i.e. bitcoins. My guess is as good as yours, so till the clarity is reached flipping the bitcoin to bring in more and interesting use to what underlies it should continue.