ZhongAn, the first web-based only insurance provider in the People’s Republic of China, has established its ZhongAn Internet Technology (IT) Services subsidiary. This auxiliary start-up will collaborate with the insurance firm as well as external partners to conduct further research on blockchain technology and build up artificial intelligence commonly known nowadays as AI, cloud computing and data-powered technologies.
Open Platform based on Blockchain
The R&D initiatives of ZhongAn depend on an open platform based largely on blockchain. In fact, the company introduced a blockchain protocol or set of rules to facilitate insurance transactions and moderate the progression of its insurance bionetwork. This company knows the safe platform facilitates connections between collaborators and data of operations. These work within the so-called distributed ledger.
This open technological system is characterized by a lower technical threshold or ceiling in development and maintenance. It decreases impediments to business teamwork and enhances efficiency as well. ZhongAn IT Services recently formed a partnership with entrepreneurs from multiple industries. These include construction, consumer finance, decoration, financial institution, healthcare, insurance, logistics, payment, retail, and security. This group comprises the Shanghai Blockchain Enterprise Development Alliance. It focuses in the promotion of R&D for blockchain in China.
Ant Financial Services group (formerly Aglipay), Tencent Holdings Investment and Ping An Insurance Company founded the ZhongAn Online Property and Casualty Insurance. To date, the company manages 460 million clients and 5.8 billion plans. Last year, it earned $US931.1 million or 5.78 billion Yuan. ZhongAn conceived the “ABCD” Strategy to combine Blockchain with Artificial Intelligence, cloud administration, and data apps. The tech subsidiary plans to introduce services utilizing the blockchain cloud platform soon. Management considers this move as a way of developing unique financial technology environment. It integrates technology research with financial modernization. With this effort, ZhongAn created two towers of strength using its client base. These are the connector and stabilizer. The third is to accelerate financial technology and increase benefits so it will become a commercial power.
The Chinese insurance adopted the Ethereum Blockchain for its current operations. Russian programmer Vitalik Buterin, founder of Ethereum, lauded the decision of the Chinese firm to combine the technology in creating an open platform. This can encourage other enterprises in China to join in the development of this new discipline. ZhongAn will work with Fudan University School of Computer Sciences and Technology in Shanghai to build a blockchain and information security facility.
Initial Public offering
The insurance giant intends to put up an Initial Public Offering (IPO) in 2017 of $2 billion. At present, it has a value of $8 billion and requested for advice from local banks regarding listing plans. This precedes the selection of underwriters for the IPO. The Peoples Republic of China is gradually reopening its IPO market after deferring new listings last June. This was the turbulent period (June 2016) in China’s stock markets.
The country’s Securities Regulatory Commission (SRC) approved a second set of nine IPOs under new policies. Said system ensures that private investors and corporations instead of the government will have more control over prices and market timing for share offerings. Some 700 firms are still waiting for approval from the SRC to proceed with listings. There is no decision yet as to ZhongAn’s choice of stock exchange although its partners were listed on the Shanghai Exchange.
In 2015, ZhongAn obtained $934 million from several investors like China International Capital Corporation, Morgan Stanley, CDH Investments, SAIF Partners China, and Keywise Capital Management. This is one of the largest fund-raising initiatives made by a Chinese tech corporation.
Blockchain in Financial Markets
This new and primary technology revolutionizes businesses and business procedures. This is why Blockchain is getting a lot of attention from the financial technology industry and investors. The technology bolsters the bitcoin digital currency and achieved success up to this point. Blockchain managed to drive this up-to-the-minute digital currency to the world of trade.
According to a prominent researcher (Dr. Hermann Rapp, Senior Lecturer/Head of Technology and Research, Block Asset Technologies), blockchain technologies are based on many years of R&D. The fields of research include specific codes, dispersed databases and networking. Meanwhile, financial markets continue to evolve partly due to the 2007 global financial meltdown. Furthermore, there are repeated calls from society to have a secure system that will not affect taxpayers during economic crises. This was made through political agenda.
Technology is Disruptive
Blockchain technology allegedly supports radical changes in market structures and processes. Yet, some stakeholders insist the platform is still raw and requires a bit of restructuring. This is a no-brainer but the fact is distributed technologies can help facilitate considerable benefits when it comes to safety, speed and cost-effectiveness.
Blockchain is a decentralized automated ledger providing diverse transaction processes with companies offering financial services. Nonetheless, its application in the field of market infrastructure is causing raised eyebrows from financial enterprises and their respective providers. The technology’s design can take the place of infrastructure built around the principles of centralized control and processing. This is perceived to be a threat by major players. However, threats can turn into opportunities so investments are expected to come in the long-term. Many issues remain unresolved specifically with regards to the combination of central and scattered technologies.
Said platform may be implemented through the peer-to-peer approach so it jeopardizes the roles of suppliers and middle men. It will potentially rewrite processes created around traditional markets’ historical construction. The pragmatic outlook or belief is this. Markets are not transformed by technology. They change because of demand while users are keen on introducing volume. Henceforth, the trust of customer is the principal concern when it comes to changes that are espoused. The introduction of novel technology such as blockchain regardless of its magnitude has the possibility to fail. Failure will be caused by insufficient uptake.
Quality of Data
There is a need to entice users. At the same time, it is data quality is essential. It needs to use typical definitions recognized and accepted throughout the global markets. The downside is data quality in financial markets worldwide suffers from numerous silo infrastructures. IT silo happens if work units or management teams of companies fail to share objectives, information, tools, procedures, and priorities with other divisions. It affects day to day operations, lowers morale of personnel and contributes to the overall downfall of corporate organizations.
The fact is companies in the financial services sector found it hard to present solutions for the improvement of quality. It does not matter what the kind of data is and where it came from. Part of the solution could be data vendors but they can also be one of the causes of this problem. Experts say present markets need simple and controllable data capability. It enhances quality, strength and extent of data many industry groups all over the world are trying to address these issues. Unfortunately, urgency is lacking particularly because of lack of modifications in the data sector.
Ontology and Blockchain
Ontology can supply the tool so data can be handled more effectively. Ontology refers to the network of principles within the domain making use of common terminologies to indicate categories, interrelationships and properties of such concepts. Ontology signifies the structure for sorting out information. It is used in AI, systems engineering, semantic web, information architecture, enterprise bookmarking, and library science. Conception of domain ontology is vital to the meaning and usage of an EA structure or Enterprise Architectural Framework.
Identifying and mining required data from one group comprised of the same information can create opportunities to formulate effective customer service as well as cut down risks and expenditures. The expected outcome will also ensure improved reporting capability for regulatory conformity as well as better management control. Blockchain will not only deliver data but lead to transparency and security. This will lessen dependence of financial entities (banks) to purchase data repeatedly.
Blockchain technology can be seen a facilitator of change although execution is seen as a primary concern. Data vendors will exert all efforts to protect their businesses. Banks must invest to improve the infrastructure of their legacy systems and evaluate their commercial contracts with these merchants. It entails costs and is definitely convoluted. This compels senior managers to figure out current data issues. Companies need to recognize opportunities and invest on changes.
This is where the platform has substantial value and promise. Nevertheless, transformation and completion as well as major usage and volume appear to be less viable in the interim under the present structure. It is possible for issuers to make use of blockchain in transmitting data directly to shareholders. They can sidestep the supply chain of market data. By all intents and purposes, Blockchain offers a technology mystery. Yes, the technology works and is accessible available. The challenge is allowing functionality existing with legacy systems that the other blockchain technologies and current market perform. This is the main thing that all stakeholders must be able to resolve.