The Sunshine Finance Company is a medium-sized financial organization based in New South Wales. Its Head Quarter is based in Sydney. The company started as a community bank to provide services to retail customers and currently it has both retail and corporate clients with several branches and business operations in New South Wales. The areas where the organization wants to explore its business are expansion of e-commerce activities and business, and adoption of block chain technologies and applications for solving current business problems. There are authentication and technological problems that it has faced from past few years while implementing online business model in their own Company. The purpose of this report is to provide block chain technology applications in real-life scenario, block chain based applications, its advantages, disadvantages and risks, and recommendations. The key objective of the report is to resolve the current problems by considering block chain technologies and applications along with the advantages, disadvantages and risks associated with it. The information provided in this report is investigated through reviewed journal and articles that will be used to analyze the feasibility of potential expansion strategies for the organization.
The outline of this report defines block chain technology and its development. The application of block chain technology in banking, retail, healthcare and agricultural sector is focused in this report. The report also focuses on different types of applications based on block chain technology that should be considered by the organization including advantages, disadvantages and risks. The consideration of risks with recommendation of mitigating these risks is also addressed. Finally, the recommendations for the analyzed and proposed solutions are provided to be presented to the senior management for consideration.
The following definitions are given for the following terms that are going to be the major highlight of this report.
Block Chain Technology
The block chain technology is basically a distributed database of records which have been executed and shared among parties which are participating.
Block chain technology is an essential part for financial and non-financial area. The block chain is described with reference to Bitcoin that is a decentralized peer-to-peer digital currency. The term block chain has emerged from the popularity of Bitcoin and it has lot of potential in future as described by the author. Bitcoin is a most popular example that uses block chain. The concept of block chain technology is described through working of Bitcoin as block chain is linked to Bitcoin (Crosby et al., 2016). The block chain was earlier used in financial sector however with time it has found its applications in non-financial sector also.
There are five basic principles underlying the block chain technology are distributed database, peer-to-peer transmission, transparency with psedonymity, irreversibility of records and computational logic (Basden & Cottrell, 2017).
Development in real scenario
The block chain technology in business process improvement is carried out by focusing on value driven Business Process Management (BPM) framework. The framework consists of external focus (networking, quality and agility) and internal focus (compliance, efficiency and integration) (Milani, García-Bañuelos & Dumas, 2016). Efficiency and quality are correlated, and efficiency provided by block chain technology increases by reducing time and at the same time quality is also assured. Agility and compliance are correlated, and agility is termed as providing of speed and ease to business processes. The compliance is provided to share sensitive information across the business in secure manner. Integration and Networking are correlated, and both the terms are used together to provide better integration of processes and connection of information system within the business.
The block chain technology is useful for development in product-centric information management. The product-centric information management has issues of digital trust and multi-version concurrency control which is eliminated through introduction of block chain technology (Mattila, Seppälä & Holmström, 2016). The article explains block chain technology through a case study of various areas in an organization such as supply chain management.
The block chain technology is developing in various nations such as Africa and other nations. The use of block chain technology in the form of Bitcoin in these nations is categorized in two key sectors and they are support for citizens and for eliminating corruption (Nicholson, 2017). The block chain technology has advantages of honest nodes that help to prevent attackers from the system.
Banking Industry
A survey was conducted where responses collected from experts of information technology, payment transaction from banks and financial providers such as providers of credit card and other (Peter & Moser, 2017). The survey showed that only few banks implemented block chain technology and they found it useful for their banking operations. The FinTechs are using block chain technology and it helped them to eliminate various issues. The banking industry has started to implement however due to high cost they are not willing to implement block chain technology. Therefore, the banks are still lagging behind on whether they consider block chain technology or not for banking operations.
The areas in banking industries where block chain technology is preventing issues are payment areas (cross border payment and money transfers), clearing and settlement, core banking (deposits and withdrawals) and Know your customer (KYC) (DQINDIA Online., 2016).
The reduced cost and time, improves security and privacy, easy procedures, data management is easier for the whole operation. These benefits can be taken by Sunshine Finance Company to improve its business.
Retail
The data in retail industries are increasing day-to-day. The block chain industry has disrupted the retail industries more than any other industry. The application of block chain technology in retail industry has contributed to supply chain sector and has benefitted in customer profiling, transparency, authentication and loyalty (Chakrabarti & Chaudhuri, 2017). Block chain technology can be used to store details of shipment and will help to analyze real-time scenario. Block chain also helps in accumulating information related to customer buying patterns. Transparency is another factor which is important in retail and block chain provides transparency to view the details of product such as source and price. Block chain is also used to authenticate the product and store encrypted customer data to be available across the stores.
The improved transparency of products, efficient supply management, improved loyalty and the major benefit is customer satisfaction can be taken to improve the business operations of Sunshine Finance Company.
Agricultural Sector
The agriculture sector includes many stages ranging from production to transportation. The agricultural sector has main objective to prevent any risks related to food safety. Block chain technology helps to mitigate the risks associated with food safety. The article shows that although Internet of Things technology helps in tracking and ensuring food safety, it does not provide security after storing the data which is tracked. The block chain technology is used for this purpose in agricultural sector and in the article secured data storage is designed based on block chain technology to provide better security (Xie, Sun & Luo, 2017). It provides security to data storage and prevents the data from getting tampered. Block chain technology provides real-time monitoring and analysis of food products, effective storage and prevention from tampering of data.
The benefit of prevention from tampering of tracked data that is stored in the database can be used in Sunshine Finance Company for effective business operations.
Healthcare industry
The use of block chain technology and implementation is described through a case study of MedRec prototype for Electronic Health Records (EHR) in healthcare sector. Healthcare sector has earlier adopted Electronic Health Records and now there is a need of compliance of innovation for data access. MedRec is proposed using block chain technology concept (Ekblaw et al., 2016). The benefits of block chain technology help MedRec to manage authentication, confidentiality, accountability and effective data sharing within the healthcare sector. The study shows that MedRec provides security to Electronic Health Records using block chain technology concept. The working of MedRec for Electronic Health Records is given using Smart Contracts structures. Block chain technology is also used in MedRec with the context of National Healthcare priorities.
The block chain technology utilizations will help health care industry to share data related to genetic, diet, lifestyle, environmental and health among healthcare providers and patients (Linn & Koo, 2016). This is achieved through block chain technology model having three key elements that are scalability, access security and data privacy. This model will help healthcare industry to achieve better output.
The comprehensive and easy login and access to patients and doctors for accessing the healthcare records and prescriptions can be used in Sunshine Finance Company to provide security of data.
Database
Block chain technology based database is an essential application for secure data storage in organizations. Although cloud computing provides security however, it too has limitations that are they cannot control physical storage of data and control of its access in cloud computing storage. Block chain technology has emerged as a big player in securing data storage and providing integrity. A case study of European SUNFISH project helps to understand block chain based database functions and operations. The case study shows that database lacks in providing performance and stability however the block chain based database helps in data integrity, authentication and authorization to existing cloud computing storage (Gaetani et al., 2017). Therefore, block chain technology based database need to be improved for providing performance and stability.
The other benefit that block chain based database gives is that it provides transparency in secure data deletion scheme (Yang, Chen & Xiang, 2017). The cloud computing owners assure that they have deleted the data that the organization wants but there is trust issue in data deletion scheme. Therefore, block chain based database helps to provide data deletion scheme for verifying the process of data deletion.
Digital Identity
The authentication of any user is important in any organization as it helps the organization to be secured from any misconduct. Therefore identification of any user entering in the premises of organization or using organization’s website, is necessary to be done. The digital identity is an application that helps in authentication of any user. Digital identity has become an important part of every organization for authentication however there are issue associated with digital identity application (Rivera et al., 2017). Digital identity helps to identify a person through their name, address, credit record and other records such as health records. Block chain Technology based digital identity helps to provide validation and authentication of users in a secure, private and efficient way to the organizations. This will help to prevent some of the behaviors such as corruption and cyber attack. The digital identity’s concept has four phases and they are centralized, federated, user-centric and self-sovereign identity (Bakre, Patil & Gupta, 2017). These phases help in implementation of digital identity according to the need of each phase.
Smart Contracts
The smart contract is an application which helps to facilitate and verify the performance of contract made between two parties within the organization and across the organization. Block chain technology concept is useful for developing smart contract application as it offers sharing of information without any hindrance from third party (Bogner, Chanson & Meeuw, 2016). The block chain technology based smart contracts are helpful in providing privacy from third parties who are not authorized. The smart contract application has four core functions that include registering of new objects, renting devices and reclaiming them afterwards. This smart contract provides complete privacy from unauthorized people. However, there are still many discussions on implementation of block chain technology based smart contracts due to concern related to whether this contracts operate in the way the legal contracts operate (Ryan, 2017). Block chain based smart contracts are mostly social rather than legal. Therefore, it brings more certainty and reliability.
Advantages
The advantages of application of block chain technology in various industries are as follows. The advantage in banking industry is that block chain technology reduces cost and time, improves security and privacy, easy procedures, data management is easier for the whole operation. The advantages retail industry leveraging are improved transparency of products, efficient supply management, improved loyalty and the major benefit is customer satisfaction. The advantage in agricultural sector is that it prevents from tampering of tracked data that is stored in the database. The advantage in healthcare industry is that it provides comprehensive and easy login and access to patients and doctors for accessing the healthcare records and prescriptions. The digital identity, database and smart contracts applications based on block chain technology has advantages of providing authentication, data integrity and privacy respectively.
Disadvantages
The lack of legal framework of block chain technology and trust issues is a major disadvantage of block chain technology. The technology is still emerging and the future risks cannot be analyzed with the technology. Therefore, this is a major disadvantage in every industry such as retail, banking, and healthcare and agriculture sector. The storage of bulk data and then identifying these data through identity is difficult and complex. Thus this is a disadvantage. The healthcare sector has sensitive data which needs high security and there is a trust issue associated with security which is a major disadvantage.
Ethical, social and legal risks
The legal issues related are jurisdiction, service levels and performance, liability, intellectual property and data privacy. The ethical risks are data breach, corruption and financial losses. The social risks are relationships issues, relation between customer and organization can be severely impacted illegal and ethical risks are not tackled effectively.
Smart contract has legal issues of identification of other party to the contract. The issue is that the contract made with the party must be identified (Bacina & Narkiewicz, 2017). The future of smart contract is debatable as it can raise allegations of misleading and misrepresentation resulting in breaking of regulations.
Other risks
The risks are privacy risks as the technology provides the transaction visible to outer world (Heires, 2016). The risk of misgivings over close identification to Bitcoins among the policymakers and regulators is major. This risk can severely impact the adoption of block chain technology (Regulatory issues in blockchain technology., 2017).
Recommendation for the risks
Conclusion
The suggested specific actions to address the problem are to adopt block chain technology based application that is smart contracts, digital identity and database. The limitations concluded are lack of legal frameworks, trust issues, security issues and complexity in identifying data from large database. The report has achieved its objective through recommending possible solutions (including risks also) for problems in the Company. The possible solutions are to implement security systems. The future work to be considered is updating block chain technology on a daily basis to avoid any further risks.
The recommendations are given as follows for the adoption of block chain technologies and applications.
References
Bacina, M., & Narkiewicz, K. (2017). Contracts and technology: Smart contracts: Just how clever are they?. LSJ: Law Society of NSW Journal, (36), 78.
Bakre, A., Patil, N., & Gupta, S. (2017). Implementing Decentralized Digital Identity using Blockchain.
Basden, J., & Cottrell, M. (2017). How utilities are using blockchain to modernize the grid. Harvard Business Review.
Bogner, A., Chanson, M., & Meeuw, A. (2016). A Decentralised Sharing App running a Smart Contract on the Ethereum Blockchain. Proceedings of the 6th International Conference on the Internet of Things, 177-178.
Chakrabarti, A., & Chaudhuri, A. K. (2017). Blockchain and its Scope in Retail. International Research Journal of Engineering and Technology4, (7).
Crosby, M., Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). Blockchain technology: Beyond bitcoin. Applied Innovation, 2, 6-10.
DQINDIA Online. (2016, November 21). Harnessing “Block chain technology” to build a transparent and cost efficient bank. Dataquest, p. Dataquest, Nov 21, 2016
Ekblaw, A., Azaria, A., Halamka, J. D., & Lippman, A. (2016, August). A Case Study for Blockchain in Healthcare:“MedRec” prototype for electronic health records and medical research data. In Proceedings of IEEE Open & Big Data Conference.
Gaetani, E., Aniello, L., Baldoni, R., Lombardi, F., Margheri, A., & Sassone, V. (2017). Blockchain-Based Database to Ensure Data Integrity in Cloud Computing Environments. In ITASEC (pp. 146-155).
Heires, K. (2016). The Risks and Rewards of Blockchain Technology. Risk Management,63(2), 4-7.
Linn, L., & Koo, M. (2016). Blockchain for health data and its potential use in health it and health care related research. In ONC/NIST Use of Blockchain for Healthcare and Research Workshop. Gaithersburg, Maryland, United States: ONC/NIST.
Mattila, J., Seppälä, T., & Holmström, J. (2016, April). Product-centric information management: A case study of a shared platform with blockchain technology. In Industry Studies Association Conference.
Milani, F., García-Bañuelos, L., & Dumas, M. (2016). Blockchain and business process improvement. BPTrends newsletter (October 2016).
Nicholson, J. (2017). The Library as a Facilitator: How Bitcoin and Block Chain Technology Can Aid Developing Nations. The Serials Librarian, 73(3-4), 357-364.
Peter, H., & Moser, A. (2017). Blockchain-Applications in Banking & Payment Transactions: Results of a Survey. European Financial Systems 2017, 141.
Regulatory issues in blockchain technology. (2017). Journal of Financial Regulation and Compliance, 25(2), 196-208.
Rivera, R., Robledo, J., Larios, V., & Avalos, J. (2017). How digital identity on blockchain can contribute in a smart city environment. Smart Cities Conference (ISC2), 2017 International, 1-4.
Ryan, P. (2017). Smart Contract Relations in e-Commerce: Legal Implications of Exchanges Conducted on the Blockchain. Technology Innovation Management Review, 7(10), 14-21.
Xie, C., Sun, Y., & Luo, H. (2017). Secured Data Storage Scheme Based on Block Chain for Agricultural Products Tracking. Big Data Computing and Communications (BIGCOM), 2017 3rd International Conference on, 45-50.
Yang, Chen, & Xiang. (2017). Blockchain-based publicly verifiable data deletion scheme for cloud storage. Journal of Network and Computer Applications, Journal of Network and Computer Applications.
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