Business using AI
Artificial Intelligence (AI) was first coined in 1956, for its use in an academic discipline. Initially problem-solving employed the use of AI. Nowadays, high volume data, computing power, storage and advanced algorithm applies AI. AI has been developed into intelligent personal assistants. Resulting in new age softwares like Cortana, Siri, Alexa, and others. These innovations have ultimately laid the groundwork for automation and reasoning, that is seen in computers recently. Mostly depicted as robots, driven towards world domination in Fiction films; AI has found a strong footing in the business world.
Use of Artificial Intelligence and it’s footing in the 21st Century
Big Data being the atom for any relevant interpretation of ideas, the huge amount of data can often be difficult for the human brain to process. AI can transform such data into an easy-to-interpret form. A noteworthy feature of AI is its capability to analyze data faster than a human brain. As a result of which many business enterprises look forward to utilizing AI to its advantage. Along with processing big data, AI can corporate fresh, ever-changing data in its analysis. This proves to be of major advantage because humans do not possess such analyzing powers.
With the technological advancements happening all around us, the popularity of startups is on the rise. This has resulted in the utilization of AI opening up greater access, to a broad set of audience and new users, unlike anything we have witnessed before. AI empowers and develops agents that help them understand its environment, perform actions. This ultimately increases the chance of success in achieving a goal.
AI and Its Uses
Financial Services, Healthcare and Retail uses AI. In IT for a variety of purposes, from fraud detection to language mining. From client management, to risk prediction, from robot-assisted surgeries to healthcare management. A wide range of industries that requires multi-tasking, makes the use of machine learning AI.
Companies like Expostores has been efficiently using it to its advantage for supply management and asset building. Global Trading is as simple as buying items from our next door grocery shop, thanks to Artificial Intelligence. Innovators are no longer afraid to set their ideas into motions.
AI with its technology has given wings to thousands of people, to move forward with their dream of opening their startups successfully, without much financial backup. Consequently, if this can’t be termed as a step towards innovation and a modern reality, then what is?
Evolution of Cross-Border Payments
Since the beginning of civilizations, people have traded with one another for goods and services. Initially, barter system was used in trade, which involved trading one item for another. This often created imbalance in trade due to the difference in wants, which led to the invention of money. However, as society evolved, borders came into being and different currencies emerged, cross-border trading often posed a problem, due to the difference in money value. Humans, in their need for consumption, has since, formulated the trading system according to their convenience.
Formally, cross-border payments are payments in which the merchants country locations is different from the country of the buyer. A Cross-Border Payment is often incurred in the form of domestic currency, where a convenience fee is involved. Both the merchant and buyer are impacted in terms of cost perspective in cross-border payments.
Now, coming to the modernization of this payment structure, international payment has come to become the torchbearer of global trade and business. International Payment sometimes takes days, often weeks to be transferred into the recipient’s account, which often comes at a disadvantage to the traders. The transaction fee is also erratic which adds poor value to the consumer’s demand chain. Thus, irrespective of the fact that international payments are among the few profitable businesses for the banks, traders and companies have no option, but to look for different payment options for their trade.
Society for Worldwide Interbank Financial Telecommunication(SWIFT), founded in 1973, has been used by financial institutions worldwide to send and receive financial information in a reliable and secure environment. SWIFT, however, is unable to facilitate funds transfer, only allowing payment orders that can be settled by correspondent accounts of the institutions. But. recently SWIFT has been used for political benefits, thereby weakening its neutral standing. Apart from this, the ability of SWIFT for providing banking security has been questioned, after it was hacked twice. Thus, the importance for the emergence of the second type of payment system has been brought into the light.
With Cross-Border Payments accounting for about 40% of the global payment transaction, it has been predicted that the overall value of the cross-border payments, is expected to rise by almost 5%, owing to C2B, B2C, and corporate payments. Digitization, in these turmoil situations, plays a significant role in how consumers and enterprises conduct business, as well as handle their transactions.
In order to rise above the problem of financial weakness, Banks and other financial institutions have been adopting the Blockchain technology for their international payments. Blockchains offer a low cost, high security, reliable payment structure. Blockchain, being tamper-proof, also offers a solution against the fraud system that is often associated with the cross order payments, where both parties have access to all information. With the increase in trust over bitcoin transactions, many startups have gained venture capital for the launch of their programs that offer cross-border payment, essentially based on bitcoin transfer. These companies involved in cross-border payments using digital platforms will be amongst the biggest beneficiaries in the upcoming years.
With global migration possible, people move to different countries for various lines of work. India, being amongst the biggest remittance receivers in the world, has been predicted to be immensely benefited by the blockchain technology. With about $62.7 billion remittances received by India for 2016, Indian banks can save about $80 million annually, using blockchain. Even though, Indian being largely dominated by the poor section of the society, devoid of new age technology, it is believed that with the help of Central Bank, a solid policy can be formulated at the advantage of all.
Even though much of the benefits of blockchain has been harnessed for its use in cross-border payments, it can only be assumed that further innovations in blockchain will take the international payment structure to new heights.
Blockchains in Trade
To start off, we break down the complex nature of the topic, by defining it in simple terms. Blockchains, a word, we are constantly engaging in our day to day vernacular, is simply a digitized, decentralized, business balance sheet of all cryptocurrency of virtual currency transaction.
Gaining momentum with each passing day, it was originally developed as an accounting method. However, it has been found useful for a variety of purposes, trade being one of them. Many believe that Blockchain has the potential to cause the biggest stir in the finance industry since the advent of electronic trading in the 1980’s.
Blockchain or distributed ledger technology(DLT), can verify any transactions, code as well as insert any type of document on the internet. The main advantage of this technology is that it creates a permanent record, whose authenticity can be verified by anyone using the blockchain instead of a specific group of people.
The blockchain is capable of accumulating a variety of industry in one single platform. Exporters, Importers, bankers, government agencies can make transactions securely, on a single blockchain with least charges. Blockchains in its use in trade, have the potential of digitizing the paper-based system of trading process, cutting the middleman and helping in direct trade.
With permanent records that are easily accessible, frauds can be reduced. With the help of blockchains, payments execution have been made much easier than ever before. This digitization of documents also reduces loss and delays that is a major problem with manual document system. Counterfeiting of such documents is near impossible. Apart from advantages of blockchains in the trading process, use of blockchains has been found beneficial in storage and trade processing as well. Expostores, for example, trades with the help of blockchain, helping in the supply chain process by creating electronic invoices, that at any time can be viewed by both suppliers and buyers.
Warehouses, used for storing trade items are conducive to illegal activities. Since receipts from storage do not describe the traded items, multiple receipts are made in a storehouses’ name. Blockchain, hinders this process, by restricting the number of receipts generated, along with digital access key, pertinent only to the owner. With all transaction history being stored, blockchain provides transparency to the trading process. There is sustainability in the trade system with the help of certificate of origin. Reducing the extensive paperwork needed in the manual process, blockchains have reduced costs and proved efficient in the growth of the supply chain.
Now, trade finance is a critical function in international commerce for many banks and financial institutions. The $16 trillion international trade depends on the easy accessibility and durability of this system. The recent trend of legal actions and fraud involved in the trading world, blockchain as a solution is irreplaceable. Statistically, it has been estimated that 60% of finance applications for SMEs have been rejected by banks due to the fear of confidence in them. This fear of risk has limited the size of the world trade market to $4 trillion to about $5trillion only; thereby adversely hindering the growth of global commerce.
Taking India into perspective, Trade Receivable Discounting System(TReDS)guidelines of RBI, can be cited as a blockchain application in mainstream commerce. This TReDS seeks to set out a system that would ease liquidity shortfall, especially for MSMEs; by the use of invoice in the financial market, for their supplies to big corporate institutions.
While the use of blockchains seems enormous, there are still, a few hurdles. Scalability of the blockchain has not yet been proven effective for non-bitcoin applications. The complex nature of blockchain requires more understanding of this technology. Banks like ICICI and Emirates NBD Bank have been among the few that have implemented the use of blockchain, along with companies like Infosys.
Trust Building with Blockchain
Trust; an abstract word can be philosophically described as a kind of reliance on other people, based on certain attitude. Going through the pages of history, it can be firmly said that, trust is amongst the few principles upon which society has been built upon. To talk about trade, or exchange of goods in simpler terms, the role of trust cannot be ignored. With modernization and global integration, there is an increasing vulnerability in the global trade chain. With hundreds of people involved in the supply chain, right from the formation of the product, to its delivery, trust is an essential glue holding the trade process together. The modern Supply Chain being, high in data and short in trust, entrepreneurs constantly need to reinvent the trust-building process with their partners.
They need a system in which, all the records can be stored and accessed by all so that there is no place for fraud and mistrust. Here, comes the role of Distributed Ledger.
Blockchain, as we know it commonly, creates a system of permanent records, of every transaction that takes place between two traders that creates a chain of trust for both parties. All the records have time stamped and connected to the previous records as well. This system has the potential to revolutionize trade as we know it, in areas of visuality, optimization, and demand.
With exchange taking place across states, a country as well as the nation, there are several doubts that a trader may have. Did the supplier send the full order? Has the order been dispatched? How long is it going to take to be delivered?
Blockchains can reveal where an asset is at any point of time, who is handling it at that at any point in time as well as its state. With the help of these data, organizations can thoroughly predict an assets arrival. Both sides of the supply chain, as well as help in efficient inventory management, cost reductions, waste management and at the same time maintaining a standard quality.
If any particular hiccups can be quoted, that often arises in the trading process in terms of visibility, it’s the transportation of products. With a huge amount of paperwork involved, that goes through many hands, errors are inevitable. Blockchain helps in digitization of this paperwork, which can be accessed by both parties, reducing the percentage of error to almost zero. At any point in time, if a document needs to be shared with multiple numbers of people, Blockchain comes in handy. Apart from visibility, traceability is another advantage that blockchain provides to its users. Knowing exactly where an asset has been, and being able to track its position through the entire process of exchange, makes the buyer trust the trading process.
Now, coming to the process of optimization of trade, with trusting the distributed ledger technique, both buyers and sellers are able to make an informed decision. The audit created with the help of blockchain creates a wider supply chain of trust. This helps build a reputation for companies, which can be evaluated by other customers when they are buying from that company.
Forecasting the demand of customers becomes easier with the help of blockchain. With the synchronous access of data from producers to retailers, no one is left in the dark. There is little place for fraud and it helps traders trust one another.
With people being dependant on the internet more than ever before, even for their basic needs, blockchain is a revolution in this new age digital supply chain.