Here’s our comprehensive analysis…

Potential Problems Due to this Model:

• A considerable amount is unstructured and unactionable in communication
• Lost in Translation
• Chances of Skipping interaction
• Manual digitization by all parties after receiving copies
• Byzantine General Problem (No trust of information)
• Email/Interactions don’t become generally enforceable law.
• Expected time of Delivery and promised quality is compromised due to clear communication.
• Every third party’s company is a black box for the enterprise. It is just based on expensive agreements, and good faith business is running.
• All data and commitment supplied by third parties have financial incentives involved. So the probability of over-committing and under-performing is very high.
• No single version of the truth with internal teams, enterprise level or third-party levels.

Challenges of Adopting Blockchain in Enterprises Data

• Hacking/Phishing Attempts to System and Data
• Encrypted Data might get decrypted after a few years. Due increase in Computing power of solve keys. Quantum computer posses that threat.
• Supply chain stakeholders business data, employee data, and systems are costly. It will have more probability and chances of attack due to cost/benefits from Competitors/Hackers.
• Supply chain stakeholders and ex-Employees can have threats to Blockchain System. Due to consensus and web access during the time of transition. Blocks inside Blockchain are immutable.
• The consistency of System is based on permission and consensus. It is a dynamic model, which can change and evolve in the supply chain network.
• Stores and Brands will have more transparency and information of chain. They might use this information for reducing the profit margin for other stakeholders.
• Planning in every phase should be strong and future ready. Otherwise, it will become obsolete, cumbersome, costly and time consuming to upgrade.
• Upgrades are tough in blockchain. Due to immutability and every new version will have different Data Block Format. It will make the system hard to upgrade over time.
• Fraud/Risk/Push/Gaps exploited by Stakeholders

Few Solutions:

• Selecting Private Blockchain with strong fundamental architecture.
• We will select private blockchain solution which is resilient, data critical for time, no loss to business and trade secret.
• Selection of private blockchain solution should be focused on big three companies. IBM, Microsoft, and Amazon. We need upgrades and security updates.
• Small companies might shut down or have problems in securing the Blockchain database. The process of upgrading is highly required by platform.
  
• Hacking, decryption and security breach should not affect trade secrets.
• A pseudo naming convention for all stakeholders, order ids, item names and details with encryption and permission-based access should be used.
• Consensus Model should be applied for adding, editing and stage crossing blocks. Consensus parties should be decided based on the hierarchy of parties and decision permission for that block.
• Every Consensus Blocks will always be controlled by stakeholders 2-5 employees per Stage. We will not give control to Suppliers to edit expected time Deliver (ETD) without Manufacturer permission or Manufacturer to edit expected time deliver (ETD) without Brand Approval.
  
• Controlling Access, Permission for reading, writing, and editing based on need-to-know and involvement is essential.
• In case of an upgrade, the code should have a version number in each block to understand the algorithm and study those blocks. At a level of inconsistency, we need flags and systems.
• Upgrades will always be deployed at network start genesis chain start level, which is order from store or brand. If there are old orders, which have not reached their conclusion (Delivery). Then those chains will follow old function in data block process flow. (It is a complicated process, and creative ideas are needed.)

  

Supply Chain in 2025:

• Stakeholders have to open data to work with each other. Stakeholders like suppliers, manufacturers, shipping companies, brands, and stores. It will create a chain of trust and confidence to do business together.
  
• Suppliers have to open current raw material and finished good inventory to Manufacturers before purchasing order. It will be based on a need-to-know basis for the manufacturer. The supplier will need bank balance assurance from Manufacturers with all future commitment included.
  
• Manufacturers have to open production line data, human resources data, the condition of human resources, waste management and the actual time of delivery updates at a real time. Manufacturers will need bank balance assurance from brands with all future commitment included.
  
• Shipping companies have to open capability and capacity data for better booking. They have to provide real-time data of ship/air positions to supply chain. Shipping companies will need bank balance assurance from parties.
  
• Brands have to open their purchasing power to make manufacturer assured of payments and faster delivery. They expect same from stores.
  
• Stores have to open data of user behavior with brands in the deeper level like style trail room visits, a style which has more hand touch and sales graph with user profiling. Brands will deliver more information about ad campaign performance, digital eCommerce performance, and planning process.
  
• Once this data will open, and a new consensus model will evolve at every stage. Then smart contracts will start to remodel in the supply chain industry. e.g, If you deliver on this date automatically, payment will be made on this date, and if you delay by one day without approval, 0.1% will be deducted off the invoice amount as penalty.
  
• We will move away from paper contracts, and configurable contracts will evolve in the industry with standard codes. Both parties will verify smart contract code and accept. Once accepted it would be implemented in that stage or at purchasing order.
  
• It has to record a chain of events by a machine to machine, machine to software and software to software interaction. Humans will interact with natural language, and it has to be converted to actionable items, event recording, stage shifting and consent given/not given the model.
  
• Consensus Model will be based on the Byzantine General problem. We need to get consent from parties involved to change stage. It is also based on rights they will have for voting in stage transfer or not. e.g, Change of date for the expected time of delivery cannot be done, supplier. The manufacturer can only do it with internal teams consent.
  

Just Imagine, all this data is shared between companies and third parties with machines, ERP softwares, IoT devices, emails, excels sheets, CCTV and images with a need-to-know basis and preserving trade secrets.
Currently, only blockchain can solve the problem of integrating all this data with consensus between parties and immutability for fraud-proof.

Basic guidelines for Designing

This solution list of the foundation of product development. We have to achieve all the mentioned points in various phases of the project.

• Truth is Key to unlock the potential of organizations
• One version of Truth
  • Truth is defined by the maximum ability to know reality. Rest is subjective truth, stories and the second version of truth.
  • Supplier accepting the expected date of delivery (ETD) should have double confirmation System. So we have a very sure commitment from Suppliers.
  • We should never apply double confirmation for Brand. They are a prime source of truth for Manufacturing companies. Editing of ETD rights should be always allowed to Brand.
• One version of Truth can be derived only by knowing chain of events and consensus of that event with timestamp stored with immutability.
  • Every interaction with stakeholders, internal teams, top management is event. It should be tracked and inserted in chain.
  • Few events will require double confirmation before entering in the chain. As events are immutable. We need them to be double confirmed with the event when the stage is crossed from one set to another. e.g Supplier shipped material from China.
  • Extracting one version of Truth/Chain incase of any conflict with Store/Brand/Manufacturer/Supplier/Internal Team
• Segregation of Information based on necessity.
  • Cost is sensitive data but time is critical performance data, which needs to free flow from Store/Brand/Manufacturer/Supplier/Internal Team.
  • Two level of data encapsulation and security is needed when we will insert supplier, manufacturer, Brand, Shipping and Stores data in Blockchain.
• Non-Sensitive information in Blockchain.
  • We will never insert Encrypted or Unencrypted sensitive information about price/cost in Blockchain. (Cryptography can be broken with Quantum Computer or Future technology or Hacking or Platform Bug of Blockchain. We should never be vulnerable to that hacking in future. It can be cracked after 20 years when technology is ready. It will become an embarrassing situation for stakeholders. Precaution is better with Blockchain)
  • Time ETD is non-sensitive information but within the ecosystem of stakeholders.
• Information Distribution in real time
  • We have only Information Asset within the supply chain network. We need this to free flow for best results. Information like time, raw material, ETD for order and time-sensitive information within the network. ETD and ETA should be strict and enforced across teams and need to know basis.
  • Top management should receive focused information to all stakeholders.
• Alert system for better knowledge and monitoring (Email Focused)
  • Open/Reply/Forwarding Emails from stakeholders as Analytics and Knowledge.
• Agile and Actionable information to find gaps before it is too late.
  • Timeline strict project should have special considerations in System with more strict Alert systems.
  • Stakeholders with track record is important. We can plan penalties for not responding and delaying in system.
  • Department/Head/Employees agility should be tracked and rewarded.
  • Top management should be kept in driving seat rather than receiving information from the hierarchy.
  • Predictive Logic: Foundation of this logic will be written on stakeholders past record of supplied orders. Assuming we have low ranking suppliers (low ranking means delaying inventory suppliers) in particular brands. Then we should focus on them as well as orders.
  • System of every order with supplier/manufacturer past record can give you likelihood of order completion on time. It is probability theorem but effective for triggering danger orders. It will need machine learning on past data and conversation.

Mode of Communication of Stakeholders

Store, Brand, Manufacturer, Supplier, and Shipping companies.

1. Email(Heavy used system with maximum inefficiency)
2. Image Proof/CCTV footage(Applied to all stakeholders.)
3. Excel Sheet (Non-standard Formats and highly different across emails and ecosystem.)
4. RFID(Complicated and different implementation by each stakeholder. Data planning is needed for it.)
5. ERP(Structured Data and System. Sharing them on blockchain will be key.)
6. IOT and Custom Devices(Monitoring, Analysing, Measuring, Access control data can also be inserted in blockchain to derive chain of events.)
7. Open APIs for Shipping companies and other stakeholders (It is entirely dependent on stakeholders implementation. Eg. Fedex Tracking API is easy. But shipping companies is tough.)

Process Flow

1. Order from Brand to Manufacturer
2. Requesting Quote from Suppliers
3. Receiving Quotes
4. Negotiation and discussions for best ETD and Price with Suppliers
5. Suppliers Selection
6. Generating order for each supplier.
7. Account team will create Invoice and send Suppliers.
8. Supplier delivers Quantity and Quality approved raw materials to shipping companies.
9. Shipping received for manufacturing.

Planning Process for development

• Methods for Interaction between stakeholders and departments.
• Trade Secrets outline, what needs to protect in the supply chain. It can be in database list of the supplier, manufacturer, brand owner or store owners. It also includes employees data, email flow, process flow, etc.
• A detailed structure of involved stakeholders, teams, roles, hierarchy structure, user roles, daily interaction and flow of information and data needs to be planned before executing who, Does What, Reports to Whom, Where, When and How. Then teams can create proper roles and data packet they are generating in System.
•  Data Packet Design for Blocks in the chain
• Data Block insertion rights, editing rights, and updates rights.
• Data Block planning, stage segregation systems, Flags from one status to another, highlighting blocks and confirmation of stage crossing.
• Blockchain Nodes for team stage crossing and coloring system with a satisfaction level.
• Consensus between team for crossing stage, creating orders, ETD and actionable buttons will be planned.
• Conflict Data Blocks inside the chain. They need to be highlighted in UI with actions to resolve by consensus with parties involved.
• Screen planning, Tree System planning, Stakeholders wise Access to blocks.
• Alert System configuration based on order, supplier, manufacturer, brands, stores, and shipping companies.
• Security of data and the entire system. We need to write all possible hacks, security threats, access control threats, data stealing within teams, consensus breaking and leakage by stakeholders.
• Planning for double confirmation and blocks, which need them. Generally, it will be used for stage crossing.
• Upgrades for the entire chain. In case of Upgrades, we need to plan for future with Data Blocks, Network, and Process flow.

Example of Data Blocks and Stages.

We are covering a small part of the chain. So we have a better idea chain shape and method. We have taken the process from brand ordering to manufacturer and manufacturing orders to suppliers.

RFID Data in the same Blockchain

We are giving you an example from a Brand perspective. If Brand is giving an order to Manufacturer following data should be added in Blockchain for better tracking and following up with teams.
The small process explained for RFID implementation and data generation:

• Raw Material entry in Production
• Production started
• Finished Production in Factory
• Factory Shipped to Forwarding Warehouses
• Shipments
  •  Shipment to the destination in Direct
  • Shipment to US Warehouses
  • Received in US Warehouses
  • Shipping to Client to Stores
  • Return Shipment

The chain will be having all data blocks coming from RFID devices and stitched to the chain. This information will be provided with a timestamp in it.

Conclusion

We have to understand blockchain from philosophical level during planning and implementation. It is about companies opening up their data to other stakeholders for mutual benefits and automating processes. Many processes and orders are pending and waiting in the long supply chain due to approvals and confusions if we share that information with other stakeholders concerned with it. Then we can have accountability and streamline the process. There should be explicit consensus/agreement between quality, quantity and time between stakeholders in case of any editing in orders. It should be approved by both parties. It can reduce pressure from the supply chain.

“Information collected from various sources should be aligned for knowing one version of truth and transparency in the ecosystem without disturbing trade secrets of each stakeholder.”

Recommended Read: 

• How is Blockchain Disrupting the Supply Chain Industry
• Top 10 Reputable Blockchain Development Companies
• Blockchain Technology Explained: Introduction, Meaning, and Applications
• Blockchain in Healthcare: Opportunities, Challenges, and Applications

The post How Can Blockchain Remodel Supply Chain? A Comprehensive Analysis appeared first on EngineerBabu Blog.

“You have to, to serve these markets, re-imagine how money can be managed and moved because there’s going to be more change in the next five years in financial services than happened in the past 30.”

– Dan Schulman, CEO PayPal

Thus, there is absolutely no denying the fact that technologies will continue to invade the age-old financial industry. Riding on the fintech bandwagon, many millennials and innovators have reinvented their businesses and made a hefty profit in the transition.
But, how do you even start?
With tons of startups entering the market every month and billion-dollar giants running the show, it can be quite hard to get your piece of the pie.

The 5 Best Fintech Startups and Their Recipe for Success

What’s better than to learn from those who have already made it big, so before delving into the recipe for success, let’s first look at some trendsetters in the current fintech setting, and what has been their secret ingredient.

1. Stripe

• X-Factor:
  • Ease of Integration
  • Tools
  • Competitive and Crystal Clear Pricing
  • Customized
  • Better Customer Support
• Niche: Online Payment Services
• Funding:
  • Raised a total of $685M in 9 rounds.
  • Now valued at $20B.

Stripe’s impeccable functionality and meticulously designed API has helped create the best possible product for the consumers. It has undoubtedly become a one-stop destination for the creation of subscription services, crowd-funding platforms, an e-commerce store and more. This tech company has been able to build an economic infrastructure for the internet by helping out businesses of almost every size. It combines a payment platform with applications that put revenue data at the heart of business operations.

2. Robinhood

• X-Factor:
  • Laser focus on target market (millennials)
  • Viral marketing strategies
  • Clutter-free interface
• Niche: Trading and Investments
• Funding:
  • Raised a total of $539M in 5 Rounds
  • Now valued at $5.6B

It could easily be touted as the top fintech company of this year. In order to keep the fees down, the company abstains from opening storefronts and renders no additional tools. Aptly named after the popular fictional character, it is helping the less economically privileged grow by using and betting on rich people’s money. The fintech app has eliminated all brokerage fees that have traditionally been associated with initiating a buy or sell. It earns money through its Robinhood Gold accounts for premium members and by collecting interest from cash holdings and stocks just like a bank. The app is clutter-free and straight-forward, making it easy to use for everyone.

3. Lu.com/Lufax 

• X-Factor:
  • Broad product offering
  • Diverse liquidity avenues
• Niche: Peer-to-Peer Lending and Financing platform
• Funding:
  • Raised $1.7B in 2 rounds of funding
  • Now valued at approx. $10B

Lufax has grown to become China’s largest fintech company in less than four years. It is considered to be China’s most innovative non-SOE financial institution. The number of registered users on Lufax surpassed 14 Million recently. Lufax takes complete advantage of the latest big data and IT offerings, and clouts the most advanced risk assessment models and risk control systems.

4. Paytm

• X-Factor: 
  • Extremely high brand awareness
  • Strong marketing campaigns
  • Word of mouth
  • Strong investments from big-wigs
• Niche: Online payments
• Funding:
  • Raised over $2.2B in 4 funding rounds.
  • Now valued at approx. $15B.

Touted as India’s largest mobile commerce platform – it has 80 Million active monthly users and processes around 5 million transactions every day. Paytm tries to maintain an open culture where everyone is a hands-on contributor and feels comfortable sharing ideas and opinions. Paytm’s team spends hours designing each new feature and obsesses about the smallest of details.
Paytm’s approach is quite simple – To design something they’d use.

5. Klarna

• X-Factor: Business Model
• Niche: Online Payments
• Funding:
  • Raised $681.7M in 13 funding rounds
  • Now valued at north of $2.5B

According to its CEO, Klarna’s mission remains the same, even after 12 years of its formation – To make paying as simple, safe and above all, as smooth as possible.
This simple vision has helped Klarna become one of the largest banks of Europe.
Klarna’s pay later policy has proven to be a tremendous success across Europe. Try it first, pay later, lets users pay 14 or 30 days after delivery depending on the store. Besides, there is also an option of paying in installments for its users.
They have a user base of almost 60 Million and has some 90,000 registered merchants on their platform.

So, what is it specifically that differentiates these exceptional startups from the rest of the crowd?

You might have observed that some of the words used to describe all of the listed products were – “simple” or “easy.” This can’t just be a coincidence.
Simplicity and ease-of-use are powerful differentiators that can separate any product from their competitors. The simplicity of these products gave them a competitive advantage over other established giants.
Mentioned below are the 7 steps you need to consider in order to establish a successful Financial Technology startup.

STEP 1: Identify your Niche

Fintech is a broad term and has a lot of dimensions to it. The classification of Fintech really depends on various circumstances.
It may refer to a specific set of start-ups and companies, or it may apply to initiatives enabled by technological innovations that contribute to the development of the financial segment.
There are many domains in fintech to consider, here are some of them:

• Fund Movement, or transactions by giving or receiving payments.
  • Currency
  • Payment Solution
  • Remittances
• Fund Placement, or the financing of planned or unplanned financial regulations.
  • Saving
  • Investing
  • Borrowing
  • Alternative Financing
    
• Data Management, to get insights for improving decision making
  • Financial Management Tools
  • Research and Data

For starting a fintech company, one must be crystal clear of the target market and the problem they are looking to address. Besides choosing a domain, your product should cater to a specific audience, e.g., a country, a state, a city or a particular demographic. However, it is always better to launch your startup locally first and expand to the global market later if needed.

STEP 2: Know the Regulations

The banking and finance industries are highly regulated ones’ and for obvious reasons. The regulations are why financial service industries can be tough to break into. Several laws have been put to place to ensure that these sectors are protected from frauds. Also, these regulations can immensely vary depending on the country, state or region you want to operate in.
The arrival of Fintech has ushered in new ways of handling and making money, and thus, have created a grey area for regulations. This has been drawing the attention of lawmakers. 
So, whatever domain one wishes to venture in, it is of vital importance to thoroughly understand the regulatory measures that apply according to the demographics and geography.

STEP 3: Discover your Edge

Every unique product or innovation that has been able to disrupt a sector successfully has always been the one that has done something differently.

There couldn’t be a better example for this scenario than Robinhood. With their unique business strategy and viral marketing campaigns, they were able to successfully disrupt the trading and investments domain. Their distinctive business offering, like charging zero commission proved to be an instant hit amongst millennials with limited pocket.
The fintech industry is getting crowded. Many innovations are already underway. Still, a critical entrepreneurial question to ask is if your product/venture will be able to offer something unique and of high importance.
The danger for startups is to become a “me too.” If there is already an entity that is established and doing well in your niche, then you should divert your focus to something new and innovative.
Thus, it is vital for new-age fintech startups to focus their attention towards developing a product that offers a service or a feature that is exclusive to them. There needs to be some sort of nuance that your solution must provide.
This distinction would serve as the disruption that you might have been looking for.

STEP 4: Hire the Right Talent along with the Right Tech Stack

• Hiring the right talent
A successful enterprise is made from its people. Therefore, hiring crème-de la-crème from amongst the crowd is of vital importance. If your city has a limited talent pool, then attracting good talent becomes quite tricky.  
In such cases, the best decision for a startup would be to hire a software development team offshore (consider India!). This not only cuts significant costs for up-and-coming startups, but also provides a solid team of specialists with specific domain knowledge and relevant experience.
If you are on the lookout for creating a great product and are considering hiring a software development company, then look no further, we have compiled a list of the best financial app development companies.
• Choosing the right tech stack
It is must for every fintech product to have a customized software. No decent startup relies on third-party CMSs or frameworks to handle their transactions. Additionally, no ready-made solution can match the performance capabilities of a custom designed software.

With finance, comes along the risk of data breach. Therefore, data safety is one of the most critical aspects of Fintech App Development.
Every startup needs to ensure that their product is secure and all the sensitive data is encrypted and stored in the cloud.
Recommended Read: How Much does Mobile App Development Cost?

Step 5: Start by creating an MVP (Minimum Viable Product)

I strongly recommend starting with a Minimum Viable Product first.
For beginners, an MVP is a development technique in which a new product or website is developed with just enough features to suffice for the early users of the product. The final product, with all the elements, is only designed and developed once the feedback is received from the initial users.

There are numerous advantages of following this process, primarily:
1. Cheaper: An MVP saves you a considerable amount of investment because you’re not required to develop extra functionalities that may have compromised the product anyway. These cost saving are essential because you don’t know for sure whether the consumers will like the product. Through MVP you can test the waters and then dive into the deeper end of the pool.
2. Effective: Using the MVP approach means you end up with only those features that you require the most, so, there is comparatively less façade, and your product turns out cleaner and simpler.
3. Faster: Another benefit of an MVP is the Speed of Development. You’re not trying to create a perfect product right away; it serves as a platform to implement the idea, study its use, make amends and then proceed further. This makes the entire process a whole lot faster and easier.
4. Reduces risk: A startup with a Minimum Viable Product is more likely to receive funding from the investors, this is because an MVP gives you an opportunity to test the waters without directly building the final product. It allows developers to test the viability of your product amongst the target audience without requiring huge investments.
The lower the risk of the investment not paying off, the more likely investors are to fund your idea.

Step 6: Get Funded

Starting a fintech company is a costly affair. Making an incredible product requires talent, and talent isn’t cheap. As traditional organizations are trying to acquire fintech talent for themselves, startups would inevitably face competition in hiring. If your venture isn’t looking to partner with professionals who can create the entire product range, then stay prepared to shell out a reasonable amount for talent.
Now, if you don’t have deep pockets, it becomes quite difficult to stay afloat in this volatile domain. Thus getting an investor onboard becomes essential to not compromise on the product quality.
What entices Investors?
With the current wave of excitement around fintech. The global venture capital investments have crossed almost $17B. This, however, could also be a bane for early age startups, because the competition for funding is snowballing exponentially. VCs are getting more and more selective, and are seeking out companies with truly game-changing offerings.  
Thus, it is required to make your value proposition more and more enticing.

Step 7: Build Partnerships

It is as essential for up-and-coming fintech startups to develop alliances with relevant institutions, as is getting funded.

Partnering is an excellent approach to build muscle in innovation and transformation. In which you can learn at minimal cost and minimum risk. The primary reason for partnering pertaining to this specific domain is, ‘Credibility.’
It could be hard for users to trust an emerging entity, and that too in such a volatile domain. Thus, when you are associated with a relevant name, it becomes comparatively easier to sail through those hurdles. Financial institutions also bring along a large customer base and comprehensive customer data.
Thus partnering can provide a considerable boost to startups and together they could improve product efficiency and build highly accessible products.

Wrapping Up

Fintech may not be the easiest industry to target. With all the pitfalls in consideration – It takes sweat, time and effort to create a successful fintech company. It demands expertise, creativity, and honestly, a lot of grit to launch a startup in such a frivolous and competitive domain.
There are numerous opinions highlighting the supposed discord between the slow-evolving realm of finance and the highly disrupting world of technology. The pressure on tech companies to deliver huge results rapidly is immense.
Still, if you believe that you will be able to solve financial issues for your users through innovative means, go ahead. You will also need the right people by your side. A team with strong technical skills and impeccable domain expertise will definitely help in building something great.

Just be shrewd with how you do it.

After all,
Fortune favors the bold.

From helping organizations like BankOpen to dozens of startups worldwide, we at EngineerBabu have a track record of building highly successful fintech products.
And several have even gotten funded!
That’s precisely why we understand the ins’ and outs’ of this realm and how to scale a business to tremendous heights.
So, If you are on the lookout for solid domain expertise and a trusted name in the industry, contact us right away.

Recommended Read:

• FinTech in 2019. Trends to watch out for the next big year!
• Digital Transformation in Finance

The post How to Start a FinTech Company – 7 Things You Should Know appeared first on EngineerBabu Blog.