Smart Industry 1/2017

Smart Business Title Story: Blockchain
Turning Raw Financial Ingredients into Loans
■ Factury
Factury is a software-as-a-service (SaaS) investment
management platform. Launched by an entrepreneurial
team from Latvia, the founders of Factury are financial
technology experts who apply blockchain technology
to re-imagine the process for investments and credit
products originated by non-bank entities.
Blockchain allows Factury to cut out the middle man
or disintermediate the process of capital acquisition
for balance sheet lenders and institutional investors
by placing a transparent business framework around
blockchain ledger technology. The Factury approach
delivers a new kind of financial instrument, according
to the company, namely loan receivables split in
future payments.
Blockchain provides trustworthy evidence that loans
are either paid out or repaid providing investors with
complete clarity regarding the performance of their
investments, continuously and in real time.
Factury managed to grab a top 10 spot in what is said
to be the leading financial technology accelerator
in the world, Startupbootcamp FinTech in New York
City. The program ran for three months last year and
provided opportunities for participants to work with
corporate partners, including Santander, Deutsche
Bank, and Rabobank.
Taking the Mystery Out of Meat
■ Walmart
In conjunction with the recent opening of its Food
Safety Collaboration Center in Beijing, Walmart, the
global retailer, announced a collaboration with IBM and
Tsinghua University to improve the way food is tracked,
transported and sold to consumers across China.
By harnessing the power of blockchain, the technology
will generate transparency and efficiency in supplychain
record keeping while improving the safety
of food on the tables of Chinese consumers. As
sourcing of increasing numbers of commodities
Aiming to continue to tap into financial expertise and
emerging technology, the Factury team is now split
between locations in New York and Silicon Valley.
For investors, the granularity provided by Factury
provides an ability to organize investments based
on factors such as geographic preferences or time
dimension. It also supports gradual trade of the loan
parts in relation to perceived risk. Receivables are
maintained on a distributed permissioned database
(a private blockchain) that becomes the same location
for the loan originator and the loan investor.
Finally, technical features such as digital signatures
register each activity of the respective parties, building
and enforcing trust among the parties, verifying
transactions and maintaining an audit trail, the
company claims.
stretches around the world, food authentication and
supply-chain tracking is an increasingly important
activity for identifying and eliminating sources of
contamination. Traditional paper tracking and manual
inspection systems can leave supply chains vulnerable.
Blockchain seems to offer a fresh way to accomplish
these aims by providing a permanent record of
transactions which cannot be altered.
“Advanced technology has reached into so many
aspects of modern life but it has lagged in food
traceability, and in particular, in creating more secure
food supply chains. Our collaboration with Walmart and
Tsinghua University is a step of global significance to
change that,” says Bridget van Kralingen, an IBM senior
vice president for industry platforms.
Using blockchain, any food product can be digitally
tracked from primary suppliers to store shelves and,
eventually, all the way to the consumer. Digital product
information such as farm origination details, batch
numbers, factory and processing data, expiration dates,
storage temperatures and shipping detail are digitally
connected to specific food items and the information is
delivered to the blockchain at each step of the process.
namic policies for devices as they join
access networks. That would “open up
many options for charging and settlement
that are currently unavailable",
Wilmes says.
“We think that the [IoT-blockchain]
relationship will be both complementary
and mutually beneficial,” Wilmes
notes. “As both technologies mature,
industry sectors make their choices,
and standards are adopted. We will
soon reach an inflection point in
which successful use cases are widely
replicated and the touchpoints between
blockchain and IoT become
more numerous.
"There will always be many non-IoT
use cases for blockchain due to its
broad utility, but we may, in contrast,
increasingly see blockchain embedded
in IoT, often invisibly but as an essential
comp onent,” he believes.
According to Jon Geater, chief technology
officer of Thales e-Security, a
unit of the Thales Group based in La
Défense, Paris, there are some immediate
steps involving microtransactions
that can “lubricate the economics
of mass scale automated M2M.”
However, the real potential lies in developing
models of communications
and trust that build on blockchain’s
decentralized and replic ated model,
he thinks.
“Blockchain is a powerful technical
tool for things like microtransactions,
due to its relatively low cost and nomiddle-man
model, but things like
pricing agreements still need to be
negotiated,” he says. “Furthermore,
while smart contracts have the
potential to enable innovation in how
digital assets are accessed or used
there are many associated complexities.
As soon as monetization
comes into play, so do legal and commercial
matters.
“We need to be careful of applying
‘blockchain sprinkles’ to everything.
The technology has great potential
to enable all kinds of innovations
in trustworthy device communication,
transactions and management, but it
alone can’t do this: we need to learn
to build systems that truly understand
blockchain before we build systems
that rely on it,” he concludes.
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