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Why loyalty needs a blockchain


In conversation with Animesh Ghosh, CEO of Kornchain, a blockchain enabled loyalty points exchange network

Loyalty Magazine: What is KornChain?

Our mission is to build the largest multi-domain, blockchain business network that reduces cost, increases efficiency, improves security and brings an all-round flexibility.

Kornchain is the company behind the LoyalT points exchange network

KornChain’s LoyalT® is for loyalty marketing industry. LoyalT network protects business interests of repeat- sales and generates insights while letting consumers earn, burn, track and exchange loyalty points globally, for higher value redemption.

A good way of describing it is to say we are creating a payments network between loyalty banks.

What is the business case?

The business case for why loyalty companies should consider working with Kornchain is that they can choose their partners for the exchange of points and rewards, and the terms of that exchange and for their customers, they can make the rewards and points more valuable through exchange. Because the concept of exchange helps consumers to achieve their redemption goals, they are likely to be more loyal. There are also economic benefits for all parties.

When was KornChain launched?

We started the research in November 2016 and the KornChain’s LoyalT network was officially launched in April, 2018.

What was your starting point?

Animesh Ghosh, CEO of KornChain, the company using blockchain for secure and real time reward and points exchange

My thought process began with the perceived need to aggregate loyalty points, and it soon became clear that the model would have many other aggregation use cases, but we are beginning with loyalty. Research from all over the world repeatedly shows that consumers are frustrated by their inability to reach their redemption goals, by the expiry of their points before they can be used and by the confusion caused through belonging to multiple loyalty programmes that are not delivering on their promise.

Previously, the technology required to create a secure and trustworthy market place for the aggregation and exchange of points was not cheap or sophisticated enough, but with the KornChain’s LoyalT blockchain network, it is now possible to offer this in a way that is cost effective, adaptable and efficient for all parties involved.

Our list of requirements covered privacy of data, new customer acquisition, customer insights from data analytics, real time transactions and overall, the creation of an ecosystem that rewards customers better and opens the potential to build stronger relationships with all parties. This was our dream, and we have turned it into a reality.

What is your own background and what is the expertise of your team?

I have a banking and payment industry background and so I understand the challenges involved in moving and exchanging value and I appreciate the importance of security requirements and developing trust. For example, consumers are now used to instant banking transactions, and they would require the same speed if they were exchanging their loyalty points. We can provide real time exchange and settlement and provide that level of trust that is essential.

In terms of my team, we have a highly experienced technical team from banking and payment industry based in the UK, with support teams in both India and in the US.

Why are you using Blockchain?

KornChain’s patent pending LREP (Loyalty Reward Exchange Protocol) treats loyalty currency in the same way as a payment network treats fiat currency during an international money transfer in real-time. Blockchain technology is essential  for the exchange transactions to be secure, non-repudiable, traceable, immutable and real-time.

A major concern with blockchain is security of data. How have you addressed this?

Blockchain has never been found to be insecure and it is currencies such as Bitcoin, that run on a blockchain, that are shown to be vulnerable, not the underlying blockchain technology. It is usually the case that it is the two ends of a blockchain that can be insecure; the blockchain itself is impossible to breach without us knowing, and as the data is encrypted, it is secure. We are using tried and tested systems for the security and we are very conscious of the need to provide a seamless and end to end security system. What differentiates us is the functionality we have added on top of that security.

With regard to securing data from one customer and keeping it separate from that of another, we use Smart Contracts, which are now advanced enough to handle this task efficiently. Every customer can be confident that information and value stored on our blockchain is secure, private and compartmentalised.

Will you use Two Factor Authentication to provide customer security when logging in to the hub or to individual programmes?

For the hub, yes. For individual programmes, it is up to each one to decide what level of security they want to use for when the data is under their control.

Will you offer data analytics as a service?

Yes, this is one of the key benefits of joining KornChain’s LoyalT network. Interrogating data becomes much simpler which will save programme managers a huge amount of money and time. We will also be able to feed anonymised consumer behaviour data and insights to our partners in the LoyalT network.

You talk about the Korn as a currency. How will this work?

The Korn will be the white label currency whose value will be agreed by each loyalty companies participating in the exchange.

It is up to the individual programme to set the value of their points and rules around it to protect their business interest.

Why is a blockchain needed to improve the loyalty business?

There are a number of problems with the current systems in operation. No-one is saying that loyalty doesn’t work, but in many cases, consumers can’t earn enough value for the points to be useable or valued. There are also problems with fraud, data analysis, security and the expiration of points. A blockchain system can provide solutions to all of these.

Who are you working with so far?

We are working with a number of airlines, with a major shopping mall, with loyalty points coalitions and talking to all the parties who want to bring new life to their loyalty programmes.

There has been recent research that people don’t understand blockchain. Is this a problem?

No. Consumers don’t have to understand it. Blockchain will work in the background, but will make the system more efficient, and less expensive for the loyalty programme. Those running loyalty programmes will very soon understand the benefits we are proposing with blockchain.

What management and systems do you have in place to operate multiple loyalty programmes?

We have a  fully a operational exchange network called LoyalT network  plus the LoyalT mobile app for consumers and business is live and available at www.MyLoyalT.com. This contains a great deal more information. There is an operations team in place, that will grow as required. We have a number of advisors and we will call in expertise as we require it.

The beauty of our system is that it is a white label operation that can be adapted to suit individual requirements, and at the same time, we have created a hub to handle the collection, exchange and redemption of points, by various parties in a secure and private way. In effect, we are connecting the dots, and as I said earlier, acting as a network between loyalty banks. We are very nimble and flexible, and will react to market requirements as they present themselves.

Is it only Loyalty Programmes that are your potential customers?

Our mission is to build the largest multi-domain, blockchain business network that reduces cost, increases efficiency, improves security and brings an all-round flexibility. Our blockchain network is designed to exchange assets and information between multiple businesses. The strategic objective is to create a unified network for the marketing industry where businesses can drive affiliate marketing, exchange loyalty points between brands, and issue gift cards and vouchers through a sustainable network that grows organically.

Explain more about how this works for gift cards and vouchers

Our proposition is very attractive to those in the gift card and affiliate marketing industry.

For example, one of the global gift card provider who is working with us has released a ground-breaking multicurrency closed-loop gift card product which will use blockchain to create efficiencies, speed of transaction and cross-border usability.

To service the gift card and voucher market, KornChain’s Affidrive is one of the early adopters of business blockchain network with the objective to help affiliate marketing by optimizing network efficiency with reduced operational costs and zero time delay.

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