The document presents GFT's project on double spend fraud detection using distributed ledger technology (DLT) with a focus on advance invoice funding in the Italian corporate banking sector. It outlines the implementation of an enterprise blockchain based on Corda, which aims to prevent multiple funding of the same receivable, enhance data confidentiality, and streamline the verification process. Key features include a secure network, daily batch processing, and a fraud detection engine, with potential for future expansion of financial services.

1. Piotr Kania
June 11, 2018
„Advance invoice”
double spend fraud
detection with DLT

2. 2PUBLICGFT GROUP
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business
Agenda
14/06/2018
1. GFT at a glance
2. Project Business Case
3. Technology: enterprise blockchain with Corda DLT
4. Solution
5. Lessons Learned

3. 3PUBLICGFT GROUP
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PUBLIC
GFT at a glance
14/06/2018
 Technology partner to financial institutions:
 Retail banking
 Capital markets
 Insurance
 Private Wealth
 Founded in 1987 in Germany
 5000+ people in 11 countries
 Delivery in Poland:
 Łódź, Poznań & Warszawa
 700+ people
 Since 2007

4. 4PUBLICGFT GROUP
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Business Case
14/06/2018

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Business Environment
14/06/2018
 Project origin: GFT Italy
 Anticipio Fatture = Advance Invoice Funding
 Similar to factoring or discounting bills of
exchange
 Very popular financial service in Italian
corporate banking sector
 Present funding of the future trade receivable
 Issuer may apply for partial or full funding of
the receivable
 Risk: presenting the same invoice to multiple
funding providers

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Business Case
14/06/2018
 Preventing frauds related to multiple funding
of the same receivable through unrelated
providers
 Expected benefits:
 Acceleration of the current business process
 Normalization of information exchange
 Full historical record available
 Consistent user experience
 Possible foundation for further expansion of
scope and services

7. 7PUBLICGFT GROUP
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Technology
14/06/2018

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Blockchain vs Distributed Ledger
14/06/2018
Distributed Ledger Technology:
 Set of technologies distributing records of information
publicly or privately
 Database spread across computing devices
supporting information replication
 DLT does not need to be publicly broadcasted
Blockchain:
 Type of DLT
 Data grouped together and organized into blocks
 Blocks are interlinked and secured
All blockchains are Distributed Ledger Technology,
but not every Distributed Ledger Technology is a blockchain!

9. 9PUBLICGFT GROUP
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Enterprise blockchain with Corda DLT
14/06/2018
 Cooperation with R3 Consortium based on their DLT
framework
 200+ financial institutions, regulators and trade
associations
 Open source enterprise blockchain
 http://www.r3.com
 Implementation based on Corda V2.0
 Open source (but…)
 Kotlin/Java
 H2 in memory database
 Focus on stability, not speed
 http://www.corda.net
 First ever commercial production deployment of Corda
DLT-based infrastructure

10. 10PUBLICGFT GROUP
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14/06/2018
Solution

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Baseline
14/06/2018
Keeping all data
private and
confidential
Daily batch
processing 😀
with support for
on & off premises
Accessible,
permissioned
& secure network
Future use cases
and scope expansion
made easy

12. 12PUBLICGFT GROUP
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Keeping data private and confidential
14/06/2018
 „Advance Invoice” data must not be visible or
shared with any other bank
 No bank-to-bank communication as of now
 Potential support for anonymised parties
 Invoice sensitive data must not be stored on DLT
if not necessary
 Ensured by hash algorithm
 Separate DLT node per bank
 Support for bank node hosting in on-bank
and off-bank premises scenarios

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Daily batch processing
14/06/2018
 Daily processing of input files containing all invoices
from the day before
 Data files from all participating banks are processed
concurrently
 Email alerts in case double spend is detected
 SFTP communication
 Well defined fixed-length file format for input and
output
 Support for on-bank and off-bank premises
 On-bank preferred to ensure no sensitive data
enters the DLT system

14. 14PUBLICGFT GROUP
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Accessible, permissioned, secure network
14/06/2018
 Any bank may join the network at any time
 Participation is controlled by the DLT infrastructure
owner (Corda doorman)
 Identity of each node based on certificates
 Parties signatures verified on every transaction

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Fraud detection engine
14/06/2018
 Invoice hash in a shared ledger ecosystem - DLT
 Keeping track of all invoices and their usage in „Advance
Invoice” operations
 Fast
 Reduction of verification time from 2-4 weeks
to 1-2 days
 Consistent
 integrity of all transactions through cryptography
 Long-term content management
 CRUD -> CRAB
 Designed to store cumulative data that contributes
to consistency
 Easy to access via Web Frontend
 Filtering and reporting of invoice allocation states

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Future uses
14/06/2018
 Current scope only handles interaction between bank
and invoice presenter
 System can be extended to support other elements
of the financial service
 Interaction between invoice presenter and
customer
 Other intruments provided in return for „Advance
Invoice”
 Risk assessment
 Credit history
 Other financial products and service

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Lessons Learned
14/06/2018

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We are the champions
14/06/2018
 Completion of one week training provided by
R3 staff
 One of the first teams in the world to
complete Corda Developer Certification
 Number of bugs and issues submitted to R3
dev team
 Day-to-day collaboration on R3 Corda Slack
channel and StackOverflow

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But nobody prepared us for…
14/06/2018
 Organizational ”readiness”
 Determining network and hardware
requirements
 Identification, mitigation and troubleshooting
of current Corda DLT version
 Potential extensions expected, depending
on onboarding banks requirements

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Future
14/06/2018
Future

21. Shaping the future
of digital business
Piotr Kania with help of Michał, Waldemar & Andrzej
https://www.linkedin.com/in/piotrkania
https://twitter.com/piotrgkania
GFT Poland Sp. z o. o.
Sterlinga Business Center, Sterlinga 8a
91-425 Lodz, Polska
T +48 42 6630860
F +48 42 663 08 61
piotr.kania@gft.com