Building the future of fraud management systems on blockchain
Big Interview

Building the future of fraud management systems on blockchain

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Enterprise blockchain software is opening up new tools in the fight against fraud.

Q. How is the communications industry leveraging blockchain to address security and fraud in the telecoms space?

At R3 we are working with communication software vendors and service providers to design and develop new transformational digital solutions across many different use cases. However, it is very interesting that we are seeing significant growth in the area of security and fraud management, where the enterprise grade nature of our blockchain technology (“Corda”) and its ability to allow non-trusting counterparties to share data in a trusted and private way is creating amazing new opportunities to combat fraud. These solutions are being built by partners who are using Corda to empower service providers and vendors to share data in a way they never could before. By allowing service providers to share data in a secure, private and controlled way without needing to rely on an intermediary, Corda delivers a powerful platform on which to gather insights and respond to various fraud types such as Wangiri, IRSF, and A2P SMS fraud. It also gives service providers access to the data they need to rapidly resolve fraud disputes and improve the operational processes of managing fraud across carriers.

Q. What is it that makes blockchain so well placed to address these security and fraud needs?

A limiting factor for fraud management systems performance to date has been the data that they can access in order to deliver insights and solutions. Traditionally, they have only had access to their own data and a few centralised lists which are very limited. Service providers have found it difficult to share data because of the necessary security and control requirements, and because third party data is often untrustworthy. Therefore, attempts have been made to build up centralised repositories, but these have failed to reach the scale needed to enable meaningful transformation in the industry.

Enterprise grade blockchain deals with the core problem around data sharing between non-trusting parties. Using fraud management solutions running on Corda Enterprise, service providers are able to share data, such as number ranges, with one another in a secure, private and bilateral way. This means that for the first-time service providers can share data whilst remaining in complete control over who has access to what data. This means their fraud management systems can now access the best quality data they need to deliver really valuable outcomes in combatting fraud.

Q. How is R3 working to deliver much needed network orchestration and automation through its ecosystem and blockchain platform?

I think service providers are increasingly understanding what blockchain does and how it could be useful to them. Whether that’s delivering cross-carrier automation, better contract management, or enabling new services. The technology is also now being used for mission critical purposes in highly regulated sectors, showing that it has reached the maturity and robustness that service providers look for. The key challenge now is for service providers and software vendors to deploy enterprise grade blockchain solutions on blockchain networks that have the scale and the standards needed to support adoption and return significant value to service providers.

That is why we at R3 have been working so closely with initiatives like those of the GSMA, MEF and CBAN to support the ratification of standards and implementation of interoperable blockchain networks.

A great model for these is the Corda Network Foundation, which is an independent network of Corda users governed by its members. This network has many enterprises running many many interoperable business applications across different industries and is growing rapidly. It is an excellent example of an open and neutral network providing the infrastructure and scale on which enterprises can deploy and run their blockchain apps. It also provides a great model for others, and we are working closely with consortiums and industry leaders to put in place these networks of the future.

Q. Last you spoke to Capacity, you told us that the convergence of industries across use cases, such as IoT was part of your development plans. Can you give us an update on this work?

At R3 we work with customers and partners across many industries, who are adopting Corda as a powerful blockchain platform on which to run decentralised applications. We have seen that a lot of these applications run across multiple industries in a powerful way. For example, with the Covid pandemic putting immense pressure on supply chains we have seen communications service providers working with insurers, and logistics firms to implement new IoT and blockchain enabled tracking solutions. This is a great example of industries, and indeed technologies converging to deliver critical digital transformation.

What is also particularly interesting to see is the role that service providers are playing in helping their enterprise customers adopt and use enterprise grade blockchain applications to deliver on their digital transformation journeys. For example, by providing managed services or networking support as these applications are deployed and used.

Q. Looking ahead what is the roadmap for R3 and its next stage of development?

This year we have been very focussed on supporting the ecosystem of Communication Service Providers and Software Vendors building on Corda. Over the past 6-12 months, it has been remarkable to see the growth in this ecosystem and in the number of solutions developed on Corda, even with so much global disruption. Looking ahead our focus is absolutely on helping service providers develop their strategies for leveraging blockchain and unlocking a lot of value. To help them dive deep into what governance structures, operational and commercial models, and resources are required to scale up solutions. This is also very tied in with our product and service roadmap to help customers use Corda by making things like introducing new confidential computing tools, making integrations with payment rails easier, and supporting different types of interoperability.

Q. What are the key success criteria that a carrier should think about when considering blockchain as a technology for fraud use cases?

That is a great questions, because there is a clearly a lot to think about. Firstly, the application needs to have a strong business case for any project to be successful. This normally goes without saying, but the nature of blockchain technology and the fact that it is a network technology really does mean that for a solution to successfully go to market the business case needs to be considered not just from an individual carriers point of view but often from the markets point of view. Therefore, a carrier needs to think is this business case compelling not just for me but also for a critical mass of peers. A second consideration should then be what will the incentive model for key stakeholders be, to encourage adoption. This is really important because no matter how good the technology is if the incentive model isn’t right to support adoption across the key stakeholders, then it will be an uphill struggle. So it is very important to think about what incentive model is in place to encourage peers to participate, and also for solution vendors to support a use case. This quickly requires carriers interested in using blockchain to also think about what governance model they will want a solution to adopt, and therefore who will govern or operate any core service components of a blockchain network. These are critical infrastructure components like PKI and identity services, as well as network on-boarding, off-boarding and consensus services. Basically, there is a lot to think about and we often use the Corda Network Foundation as a really good example of a large community of enterprises that have come together to support a common governance structure and operating model for a blockchain network. This common standard has delivered incredible value to the enterprise community over the past few years as it has gone live and grown. The Corda Network Foundation is now one of the largest live networks of enterprises using blockchain applications. It has streamlined a lot of the network governance, operational and incentive model questions that carriers will need to think about early on regardless of the use case. 

Thomas Spencer

Industry Business Unit Lead – Telecoms,

R3, 2 London Wall Place, 12th Floor, London EC2Y 5AU |

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