BanQu - Information Governance Perspectives

Sixth in a series of in-depth interviews with innovators and leaders in the fields of Risk, Compliance and Information Governance across the globe.


Information Governance Perspectives - Ashis Gadnis of BanQu discusses Blockchain

Ashish Gadnis is CEO of BanQu, Inc. and a recognized thought leader in the blockchain community. He chairs the Financial Inclusion Working Committee for the Wall Street Blockchain Alliance and travels the world explaining how this revolutionary new technology is transforming the way we think about supply chain economics. He holds an MBA from the University of Minnesota’s Carlson School of Management and graduated from the Global Leadership and Public Policy program at the Harvard Kennedy School of Government. I spoke with him this July about blockchain, business administration and professional development.

Ashish, you recently spoke at the MER conference where the theme was “Records for Humanity,” how data governance impacts the human condition. And your company, BanQu, offers a unique solution to the challenge of extreme poverty by leveraging blockchain. With BanQu, people ensure their economic identity with an immutable record of their transactions in a system benefiting the entire supply chain. But how exactly do you, your clients and big brands set about prioritizing and realizing these goals?

Over the last two and a half years we’ve realized that 2.7 billion people, that includes refugees displaced and those in extreme poverty zones, participate in some sort of a supply chain. That can mean you’re the poorest farmer in Congo growing coffee, cacao or shea butter, you know, the ingredients that go into cosmetics, and your contributions show up in brands like eight dollar lattes and expensive body lotions. And in examining this, we realized that that current models for getting people out of poverty have failed. Those models have failed because they look at the ability to help people out of poverty separate from enabling people in poverty to participate in the supply chain. And so we actually took the other route. And nobody had ever done it. We said, “What if the people who are absolutely in that last mile, if they get to equally participate?” Then the value for the brand is suddenly more relevant.

Let’s use a simple example. If you’re buying cacao in Ghana and you’re a large chocolate company, there’s a good chance today that your last mile farmers are extremely poor and also invisible. No matter much traceability, transparency or fair trade you implement, until and unless that farmer can participate in his data, to know for example “I’m selling 40 kilos every other week to this big brand,” then that farmer will continue to live in poverty. And this is kind of a long answer, but the detail is important because that poor farmer today has everything stacked against him or her, especially if conditions are so rough. I was just in Zambia a week and a half ago and I saw firsthand some of this problem, which was that women farmers have to borrow at a higher price point.

Women farmers are always at the short end of the stick because they’re not allowed in many cases to prove their history. So what happens if you happen to be selling 40 kilos upstream and there are seven middlemen… after I sell my coffee… somebody picks it up, then brings it to somebody else, the next one goes to the warehouse and eventually you’ve lost the ability to track. And while the internet has come to people in poverty it hasn’t pulled people out of extreme poverty permanently. There’s mobile money, there’s big data, AI, etc., but none of those models actually have ever allowed that mother, that farmer, to participate equally.

When I say participate equally, it’s very basic. To me participate equally means that one, she has a physical (stored digitally) copy of that transaction that nobody can ever steal or manipulate. Two, she has the ability to prove her transaction history which legitimizes her existence in that supply chain. And three, it allows her to now leverage that data in a way that reduces her cost of borrowing. It allows her to be portable. That’s how we decided to look at blockchain and nobody in the world has ever done this. People keep talking about how they’re going to use blockchain for good and we’re the only ones doing it everyday, taking a commercial approach while being simultaneously deeply purpose driven. We started a for profit, for purpose software company and now the largest brands are coming to us because it solves two sides of the problem for them. One side is that the supply chain now becomes more cost effective and efficient. They get better visibility into the supply chain in terms of quality, market access and forecasting which enables an ecosystem for crop insurance, climate protection, education. And the other side of the coin is now they can start addressing issues like gender equality, labor rights and other important issues.

BanQu offers a software-as-a-service software (SaaS) platform that supports six key Sustainable Development Goals (SDG’s) out-of-the-box. Together, this “Economic Identity Passport” is used by corporations, governments and INGOs looking to meet their UN SDG goals and other commitments. Since launch, what have you found are the most utilized of the tools?

They’re intertwined. This is why we took more of a platform approach. And that’s why it’s a software as a service. A lot of companies are going to focus on water, or healthcare or gender. We looked at these six UN SDG’s and realized that they should always be looked at together. So let’s look at a live example. We’re live in eight countries. As I mentioned I was recently in one, in Sub-Saharan Africa and we’re talking the bottom of the pyramid there. No running water, no sanitation, no paved roads, high malnutrition – tough as it gets. Yet their farmers (especially the women) are very intelligent and resilient and grow crops because there is a market. BanQu gives them confidence and dignity because their harvest can be sold with full traceability and transparency. At the end of the day it’s a circular economy and now the woman farmer has an economic identity. You know, for us the economic identity is the ability to prove our identity in the transactions. So if I sold you 40 kilos every three weeks, you pay me money for the quality and the quantity and now it’s history. But one aspect of identity alone is useless- if you just show up at a bank and say, “Hey, I’m so-and-so, this is my drivers license and you should give me a good interest rate on a car loan.” Well, they’re going to ask you to take a hike. Whereas if you showed up with your social security card, your education, more information… you’re going to be taken more seriously. It’s just the way the world works. If I know a little more about you I’m going to treat you with a little more dignity and that’s what our solution supports.

So for organizations applying this private blockchain solution, are there some modules or some components more useful than others in the immediate term?

The most pressing one is the supply chain connection.  For example some of the largest brands in the food business will sign up with us for immediate traceability and transparency into their existing crop flows. Just like they’re buying salesforce.com or Oracle or SAP… they subscribe to our platform, we configure for things like language, currency, workflow, asset classes. We also have a meta-data framework that our clients can now create themselves for KPIs and metrics in real-time.  We go live and it gets deployed to the farmer who doesn’t have a smartphone, just via sms, and now the last-mile is connected real-time, traceable, transparent and the farmer participates equally. So when a transaction happens, they bring a bag of cacao or coffee or whatever to market, you, as the farmer get an SMS message confirming the transaction, and the location and an authentication token (because we don’t mess with cryptocurrencies) we use pure blockchain. Now you have a copy that says you dropped off 40 kilos, here’s the quality, here’s the payout and most important it’s secured and private.

So the key empowering impact is that you have a permanent digital proof of that asset from “tree-to-cup or mine-to-battery.” Step two is that as the transaction progresses you have a record of the payout which is a big deal in emerging markets especially around security and most importantly in terms of building your credibility in that crop flow.

If you were dropping 40 kilos every two weeks and a broker was just taking it off of your hands, you have no ability to prove that you have been growing a good crop. So as the weeks go by, now the farmer can see her entire history, and its validated in the ledger which makes her bankable.  It benefits both the brand and the farmer as well as the entire supply chain.

And have we begun to tap this big data aspect of it? What challenges does that bring in terms of our evolving regulatory environment?

Yes and No. Partly, we’re already seeing that because we have an open API and that lets banks, mobile operators and others integrate with BanQu. Also we integrate with backend accounting systems, ERP’s, inventory management, record keeping systems and so forth. So when the second and third steps are happening they’re already starting to do their analysis because they can say, hey, we’re starting to see a good quality crop in this region. In fact, we’ve had cases where the fraud detection piece, because of the way our blockchain application works, is already showing results because everybody entering the supply chain is known and wants to be known. And everybody is now getting a copy of the transaction they participate in. From a data analytics perspective, the big brands like us because now it gives them visibility into their last mile that they never had, especially from a cash flow perspective, especially from a perspective of trying to reduce fluctuation around receivables, supply chain insurance and production planning. Because right now in a lot of these markets, it’s all cash based and it’s a ninety day reconciliation process to complete and often times very manual. Having said that, because we don’t own anybody’s data, which is a key piece, and we will never own anybody’s data because that would then defeat the purpose of creating a blockchain application. So, the data ownership is with the brand in terms of the transactions that they are participating in, but the data ownership is also with the farmer or the homeless person or the refugees. They now have a copy of their data that they can use.

The way we built it is so the end user now can prove their existence or the right to be forgotten. So we have this permission based ledger where the farmer can basically say “I want to be able to show a bank my data.” And he can give permission to the bank. Or she could say “I don’t want to participate anymore and I have the right to go dark.” Because at the end of the day, that last mile in BanQu has the ability to own, access, monetize and permission their own data. So the analytics applies but not at the last mile.

BanQu is a means to enable long-term “Economic Identity” solutions to alleviate poverty and support repatriation of refugees. One way that might be done is by enabling a “smart contract” that releases funds (to the drug manufacturer) for a malaria vaccine after a family gets the vaccine. What are the logistical challenges of an effort like that and are there playbooks you use to support business partners?

There are so many people in the middle. At the end of the day the real way to go after it is to have a good conversation with the brand. For us what we found is that all our paying customers are big brands who are either trying to do it for a profit or for social good. So the way it works is that we always look for an anchor client. For example, one of our anchor clients is a large food & beverage company. We help them map out the supply chain and because it’s the anchor client, their P&L and balance sheet on the line, they’re able to enforce the roll-out. Because it’s actually helps the middlemen to enforce the smart contract. So I’ll give you a good example where we are testing for confirmation on annuity life payouts for insurance in extreme poverty zones. And you know, if you can’t prove you are in that last mile, then these insurance companies are not able to offer you a good insurance product. So what we’ve done is we get an anchor client and then use smart contracts that get enforced across the value chain and it’s no different than a contract on a bag of coffee that flows from point a to point b to point c.

You sold one of your first start-ups, a management consulting firm called “Forward Hindsight” to RSM and then took a position with the company before leaving to start BanQu. What’s it like to go through an acquisition like that and is there anything you would do differently… in hindsight?

For me it was a means to an end. I was born and raised in a slum in India fifty years ago. And I grew up hating being poor, pretty much all my life growing up I was. When I moved to the US and started building my life, and got my own deal and started building Forward Hindsight, I always asked myself… if somebody will buy this thing and if it all works out I would walk away and try to help address the extreme poverty situation in the world. So it wasn’t like other entrepreneurs who have that itch to do the next big thing. For me it was pretty organized. I sold it and I just started volunteering in Congo for a couple of years and then I think you heard about my argument there. That’s when I realized I could volunteer for the rest of my life or I could actually start something like BanQu and make a dent in the universe. So selling of the company was just a means to my end, I knew my calling was around the corner so I sold it and walked away.

One of my goals in conducting these interviews is finding common themes that run across data management disciplines. You’ve lived and worked with people on all levels of the pyramid. Is there any common thread, or pillar, or principle that you see necessary for good information management, especially in light of blockchain disrupting the ways we’ve traditionally thought about records governance?

Well, some people push back on the work we do and say, you know, farmers aren’t literate and I take offense to that because I’ve never met a farmer or person in poverty who said, “Don’t tell me how much crop or garments or diamonds I sold you and for sure don’t tell me the price or confirmation of the pay out.” So actually farmers, miners (in conflict minerals like Cobalt), garment workers in fashion etc. are very literate and brilliant, more than I’ll ever be. So here’s the data issue. And it has a big implication to governance and you know, in my past life I worked in Sarbanes-Oxley, in compliance and audit, segregation of duties. I was deep into the compliance framework and all those kinds of issues. In that example of the farmer, what happened is the world takes for granted that the farmer’s data rights don’t exist, right? The rights for poor women that are growing your coffee are compromised everyday! We took a different approach and found that distributed ledger blockchain technology empowers the poorest while strengthening the largest global brands.

If you decouple the currency side, blockchain is immutability, consensus and value, right? For us, value is not a big deal, right? Currency is currency. The real value is consensus and immutability. And that’s where a lot of people miss the value of blockchain. We took an approach saying that farmer, the slave labor that’s making the jeans, and also the refugee, should have bleed control over all the data that he or she is either forced to participate or is willing to participate in. And that has kind of solved part of the of confusion around GDPR and data privacy because at the end of the day, if you implement it the right way, which we’ve proven in the last 18 months, the farmer owns their data, right?

So if the farmer is selling to the coffee company, but the coffee company says, “Hey, I don’t want to buy your coffee from now on.” In today’s world, that coffee company is just going to walk away with all this amazing data on the farmer. That’s the way the world works today. Yet if you use blockchain, yes, the farmer and the coffee company relationship changes. The company walks away with all this data, but the farmer now has a copy of the data that nobody can ever take away. That’s how we implement. And that’s why we’re up front. BanQu doesn’t own anybody’s data. And at the end of the day, if my bank customer goes away, in my last mile, because we have a B to B to C model, the customer never loses access to that data because we have the proper safeguards.

This seems like the ideal career track for millennials who want to use their education to further a good cause. What is your advice for a young person just starting off? How do they even begin to think about getting into block chain? Are there any majors or certifications in particular besides computer science and an MBA that would benefit them in this pursuit?

Well, for one you’ll probably have to fail a million times. That’s the easiest answer. But from a career standpoint I would definitely get into computer science or some technology stack. The big five – internet of things, blockchain, big data, artificial and quantum computing. Those five technologies will transform every aspect of life, good or bad. If you want to go start the next charity or the next big thing you better be knowledgeable about these because you might end up being a brain surgeon but you’re still going to need to also know about one of these five. That would be number one. Number two would be, just jump in, get a good startup and be willing to fail. Only have an expectation that you’ll fail. A lot of young people make the mistake of joining a large company just for a safety net or join a startup because they want to make a million dollars overnight. Both are wrong approaches in my mind. In my opinion, if you’re in your twenties, until you’re thirty five, you’ve got to say I’m going to live in eight different countries, fail fifteen different times and be completely broke but then after that you’ll have a much better chance of hitting it big.

Written by 

Rafael Moscatel is an executive, writer and speaker with over 20 years of experience developing effective and innovative information management, digital strategy and compliance programs for the Fortune 500. All views expressed on this site are his own and do not represent the opinions of any entity whatsoever with which he has been, is now, or will be affiliated.

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