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Team Rocket, International Blockchain Olympiad 2021, Whitepaper
1. A one-stop solution of all compliance and regulatory activities for businesses
Since independence, Bangladesh has changed its fate and is on its way, to become the 23rd
largest economy by 2050. But to reach there, it must first address its inefficient and
complicated business environment where businesses face a fragmented, inconvenient, and
distrusted process for executing compliance and regulatory activities. DigiDesk is a one-stop
solution of all compliance and regulatory activities for businesses. It is a private,
permissioned blockchain platform which brings together RJSC, NBR, City Corporation, BIDA
through different nodes to streamline the process of formalizing a business in Bangladesh,
while enhancing collaboration and building trust. By doing so it can improve Bangladesh’s
inflow of FDI, formalize its economy, verify, and protect information, and reduce its NPL
and bureaucracy. The architecture is constituted of Hyperledger Fabric, mongoDB, Firebase
Authentication, NodeJS, Kubernetes, Tailwind CSS, and ReactJS. Such features ensure
coordination, trust-building, immutability, security, and privacy among its users. This is a
solution that will not only create value for enterprises, but also help the government attain
SDG goals, realize the dream of ‘Digital Bangladesh’, bring down agency costs and ease
doing business in the country.
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1. Problem and Solution
1.1 Economic Trajectory of Bangladesh
Termed as a ‘bottomless basket’ with a GDP growth rate of -14% in 1971 and high levels of poverty, Bangladesh
has changed its fate in its 50 years of persistence and glory. In recent times, it has gained the lower middle-
income country status, reduced the population growth rate to 1.2%, and maintained a steady growth rate over
7%. Even during the times of Covid-19, it was able to escape a contraction in 2020 and posted the highest GDP
growth (5.2%) in Asia in 2020. With high growth rates and a thriving working populace, it is on its way to
become the 28th and 23rd largest economy by 2030 and 2050, respectively, from its 43rd position (pwc, 2018).
But to achieve that, it must first improve its current business environment riddled with many complications
and limitations in compliance and regulatory activities of businesses.
1.2 Overview of the Business Environment of Bangladesh
According to the World Bank Ease of Doing Business Index 2020, Bangladesh is ranked 168th
out of 190
economies. Specifically in the aspects of starting a business and getting credit, Bangladesh performs poorly
compared to its regional counterparts, which presents the need for a more competitive business environment.
Economy Global Rank
Starting a
Business
Getting
Credit
Starting a Business
China 31 27 80 Required Time 19 days
India 63 136 25 Incurred Cost 12,670 BDT
Vietnam 70 115 25 No. of Stakeholders 5
Sri Lanka 99 85 132 Global Position 131
Pakistan 108 72 119
Bangladesh 168 131 119
Source: Ease of Doing Business 2020, World Bank
In the current environment, when an enterprise wants to formalize its business for getting credit, it is
mandatory to have the following legal certificates:
• Incorporation certificate from RJSC (Registrar of Joint Stock Companies) if it’s a company
• eTIN (Tax Identification Number) from NBR (National Board of Revenue)
• Trade license from City Corporation (CC)
• BIN (Business Identification Number) to register for VAT from NBR
However, the current process of starting a business and getting bank loans (illustrated in Appendix B) leads to
loss of a substantial amount of time, incurring high amounts of cost, as businesses go through an
uncoordinated and complicated system for relevant regulatory and compliance steps.
On the other hand, for the bank/financial institution to verify information of the business, it needs access to
reliable information about the business and its owners, as well as relevant verified credit history. Due to the
lack of such information, the institutions often pay a huge amount to verify information, but still end up with
no reliable information.
As such, issues in the current system cause Bangladesh to lose out on many opportunities and go through
different problems including:
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Loss of FDI
Regardless of the high economic growth of 8.1% prior to the pandemic, Bangladesh has
struggled to attract foreign direct investments (FDI) into the country. This can be
explained by the low FDI to GDP ratio of 0.5% in 2019 (World Bank, 2020). This is echoed
in the fact that Bangladesh was not chosen by any of the 51 companies who relocated
their production out of China between 2018 and 2019 (Hussain, 2020).
Huge Informal
Economy
According to BBS Economic Census 2013, 99.8% of the 7.82 million enterprises in
Bangladesh are SMEs, most of which belong to the informal economy. According to the
Labor Force Survey (LFS) 2016-17, out of the total 60.83 million employed labor in the
country, 51.73 million (85.1%) work in the informal sector.
Unverified
Information
In 2020, the Global Financial Integrity (GFI) claimed that Bangladesh lost Tk 639.24 billion
(USD 7.53 billion) a year between 2008 and 2017 to trade mis-invoicing, which amounts
to at least USD 60.2 billion and 17.95% of the country's total trade.
High Levels of
NPL
Till 2020, the amount of NPLs in the banking sector stood at Tk 96,116.65 crore ( Dhaka
Tribune, 2020).
Bureaucracy
In the global competitiveness index by World Economic Forum, the top 3 problematic
factors for doing business in Bangladesh include: i) Inadequate infrastructure, ii)
Corruption, iii) Inefficient government bureaucracy.
1.3 Issues in the Current System
For the three main stakeholders in the system (business & investors, government, and financial institutions),
the issues are:
Businesses and
Investors:
Inconvenient
Process
Starting a business requires taking clearances from multiple bodies separately and
going to several offices physically and lacks clarity in some cases. This process heavily
relies on printed documents that must be exchanged between several parties and can
take up to 19 days. Correctly filling out documents and sending right ones to the right
parties in the right order alone can cost weeks to people unfamiliar with the process.
The gathering and exchange of information between the participants is very time
consuming, redundant, and error prone, or simply inconvenient.
Government:
Fragmented and
Redundant Steps
Due to having multiple authorities with no direct sharing of information and separate
databases, the processes become fragmented, which in turn lead to redundant
processes in business registration. This makes the information vulnerable and doing
business harder in Bangladesh.
Financial
Institutions:
Mistrust in the
system
Due to the vulnerability, antiquatedness, and lack of immutability of the system, there
is severe mistrust in the system as financial institutions rely on the customers’
submission of their own information for getting credit. This leads to redundant
verification processes, financial irregularities, mis invoicing, high NPL and fraud.
To summarize, the problem statement is “Businesses in Bangladesh face a fragmented, inconvenient, and
distrusted process for executing compliance and regulatory activities.”
1.4 The Solution - DigiDesk
The issues with the current processes demand an integrated and efficient system which enables the processes
to become simpler and ensures the reliability of the information. With this objective in mind, we introduce
DigiDesk, a one-stop-solution of all compliance and regulatory activities for businesses. Through DigiDesk,
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• all businesses can formalize themselves in compliance with business regulations in a streamlined
process,
• relevant government bodies can verify information about a business through one click, and
• all financial institutions and eligible investors can have access to trusted information about a business.
A simplified version of the process is illustrated as follows:
A more elaborate and detailed process is illustrated in Appendix C. The above illustrated process goes
through the following steps:
For Business (User Companies)
Step 1
Businesses provide NID, email, username, and phone number to open an account in BIDA, who
is the certificate authority.
Step 2
BIDA then provides MSP (Membership Service Provider) as certificate authority under
Hyperledger Fabric for identity management.
Step 3
The user company selects services from the DigiDesk web user interface and provides necessary
information, along with uploading supporting documents.
Step 4
The user company then confirms the provided information and completes payments through
DigiDesk’s payment gateway.
Step 5
Under Hyperledger Fabric, an authentic communication channel is created using TLS (Transport
Layer Security) between user and endorser nodes (RJSC, NBR, City Corporation).
Step 6
The endorser (RJSC, NBR, City Corporation) performs verification through multiple stages. If any
issue arises, a message is sent to user.
Step 7
After verification, the information is stored in endorsers’ individual databases and proceeds for
ordering.
Step 8
Finally, the committer (BIDA, RJSC, NBR, CC) stores the selected info in Blockchain and sends a
read-only version to user, who receives a seamless service.
For Businesses
Step 1 The institution sends a request to the user company to access necessary information.
Step 2 The company then generates a one-time view-only code and forwards it to the institution.
Step 3
Institution inputs the code and provides an email to access the files containing verified, trusted
information about the company.
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1.5 Why Blockchain?
Blockchain is not a general-purpose technology but should be applied judiciously to reap its benefits in the
proper area of usage. Appendix D shows a decision flow diagram that we used to decide the use of blockchain.
The following table justifies the two key reasons of using a private permissioned blockchain for our solution:
How DigiDesk will build trust?
Immutability
Enterprises will not be able to tamper with their data within the network. This ensures
maintenance of data integrity. This will reduce NPLs and bad debt.
Fault Tolerance Data is distributed among nodes. Fault tolerance will thus be ensured.
Decentralization
Ownership of information is decentralized and shared across a peer-to-peer network and
continually reconciled. DigiDesk will thus eliminate the need to rely on intermediaries and
other external risks.
How DigiDesk will make the process streamlined?
Redundancy
Time required to register a company will come down to 5 day from 20 days due to
information sharing among parties in a permission blockchain.
Coordination
Tasks which were carried out sequentially will now be completed simultaneously due to
better coordination. This will also eliminate the need of paper dossiers.
Cost Reduction
Financial institutions can bring down the cost of approving/rejecting a loan by as much as
35%. Business can bring down compliance costs by as much as 30%. With trusted
information, NPLs will come down as well.
2. Market and Partners
2.1 Customer Segments and Market Size
The potential customers are divided into three segments as shown below:
Market and Customer Segments
Customer Segment Type of Business Offering
Segment 1:
Already registered
companies and
organizations
Private Company, Public
Company, Trade
Organization, Foreign
Company, Partnership Firm
One stop service for renewing trade license,
providing access to information to financial
institutions for loans, updating company
information and credit records
Segment 2:
New companies and
organizations
Private Company, Public
Company, Trade
Organization, Foreign
Company, Partnership Firm
One stop service for all required formal activities
for starting a business and the mentioned
offerings for segment 1
Segment 3:
Corporate customers
and eligible investors
Banks, NBFIs, Insurance
Companies, Local Investors,
Foreign Investors
One platform to access verified information of
companies and their owners, and required verified
financial information for providing loans
Market Size
Segment 1 Current no. of companies registered with RJSC: 180,000 (approx.)
Segment 2 On average, about 7000 companies are registered with RJSC every year.
Segment 3 Corporate: 155, Eligible Institutional Investors: 1250 (approx.)
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2.2 Partnership Structure
Due to the large scale of the project, it requires assistance and collaboration between several strategic
partners, implementation support partners as discussed below:
Category Name of Entity Primary Role
Owner
BIDA (Bangladesh
Investment
Development Authority)
• Maintain the central database and the blockchain
infrastructure
• Oversee the operation of DigiDesk
• Maintain the network and collaboration between
strategic and support partners
Strategic Partner
1. RJSC (Registrar of
Joint Stock
Companies)
2. NBR (National Board
of Revenue)
3. City Corporation(CC)
• Maintain individual database
• Verify and endorse documentation for related specific
services:
a. RJSC: Incorporation Certificate, Annual Return
b. NBR: eTIN, BIN, Audited company statements
c. CC: Trade license and yearly renewal of license book
Support Partner
1. Bangladesh Bank
2. ICT Division
3. FBCCI
4. A2i
5. Financial Institutions
• Provide infrastructure development, integration, and
training support
• Assist with policy making and promotional support
• Collaborate with strategic partners
• Act as payment service providers and oversee financial
regulations
3. Competition and Risks
3.1 Competition
In the present scenario, some of the processes have to be completed physically, and the rest are a mix of
online and offline. They require going to multiple offices and filling up much paperwork. As a result, companies
seek the help of third-party consultants and intermediaries to navigate them through the complex process.
This has led to increased costs as well. As DigiDesk will be owned and controlled by BIDA, a government body,
there is no direct or indirect competition. The presence of a seamless service process through DigiDesk will
eliminate the need for intermediaries and third-party services.
3.2 Risks
Due to the large scope of the project, there are several implementations risks along with technical and
operational risks, which are discussed below:
Source of Risk Mitigation Strategy
Implementation
Digitalizing records of existing
businesses
• Creation of a central body at the onset of the project, with
representation from each stakeholder to oversee all the
processes and mitigating the inconsistencies in records
• Advocacy, integration, and promotion through the
government along with continuous training and
development programs
Fragmented, inconsistent
records of existing business
Lack of cooperation from
partners
Tech
nical
Lack of tech savviness and
adaptability
• Training and development programs for government
officials by utilizing local IT training intermediaries
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Speed, scalability, and
technical interface with
legacy systems
• Improvement of existing IT infrastructure and Business
Process Reengineering
• Use of biometric system to keep the digital signature of the
verifier with the block
Misuse of authentication
Operational
Audit and changes in data
• Use of ‘meta-protocol revocation’ mechanism to bring
changes to or revoke data (validator rules will be such that
other transactions be consulted before the final resolution
of information validity)
• Training and development programs and collaboration with
national programs under Digital Bangladesh Agenda and A2i
programs for public service innovation in remote areas
Infrastructural issues in rural
areas
4. Architecture and Governance
The architecture and governance of DigiDesk will be set up in such a way to focus on 3 core components:
Privacy, Trust, and Security. Appendix C illustrates a detailed version of the blockchain architecture.
4.1 Privacy
DigiDesk ensures privacy of user's and corporation's data through multiple measures via technological
components as follows:
Components Rational
Database Component
Firstly, public data are being stored in our own server which runs on mongoDB.
Since, we are working for businesses to run therefore, no unnecessary
information is being taken from the users. This results in no breach of privacy.
Secondly, for on-chain data, our solution is a permissioned blockchain. Without
the consent of the user, no data will be available to any of the organizations. For
financial institutions to have access to users' data, the users will have to select
the documents for the financial institution for viewing.
Information Exchange For the endorser-to-endorser and client-to-endorser communication, we are
using Fabric’s TLS (Transport Layer Security) for the security. This includes
endpoint authentication, ensuring one is talking to the right target.
Authentication
No cryptography will be used since private blockchain is used; Firebase
authentication will be used as authentication component.
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4.2 Trust
Key Factor How it ensures trust?
Identity
Management
The members of our blockchain will be government entities, that too in a limited number.
Therefore, for all the entities and the users, each of them will be verified through
Membership Service Providers (MSP) to distinguish users. About the documents of a user,
they will be verified and added to the blockchain by RJSC, NBR and City Corporation where
all of them are government entities.
Access Control
Users can access read-only versions of data, while endorsers can access as per their
requirements. For accessing the background information about a business client, a
financial institution can only access upon user permission. DigiDesk will ensure a
temporary hash code, for each investor, with which they will be able to view private data
through the website. As this is a permissioned blockchain, only specified entities will be
able to make changes. Thus, trust is built between the client and the system.
4.3 Security
In terms of security, DigiDesk will provide a private-permissioned blockchain for the partners who will be
conducting all the authentication in the system. The endorsers will be given certificates by BIDA, who will be
our Certificate Authority (CA). Endorsers will have specific
channels to communicate within the system if there is any
scenario for intercommunication between the partners, so
there is no chance of information exposure. The database
of each department will store own relevant documents of
each company and all the respective information will be
kept track of in the system, so no department will have
access to another department’s documents without access
permission. The blockchain platform will be conducted throughout a mesh network of servers of the
departments which will act as a hub for all the documents, separated, yet in contact with the other. This will
act as a failsafe if any unintended accidents, which may result in data destruction.
4.4 Technology Infrastructure
Distributed IT Management Structure
Front-End Structure
The front end of the DigiDesk website will implement SPA (Single Page
Application) using ReactJs, a JavaScript Library.
Back-End Structure
The back end will consist of NodeJs and ExpressJs to connect with the
frontend and use logical operators based on the client’s preference of
services. For off-chain data preservation, MongoDB will also be
integrated to keep information that will not be necessarily added to the
chain.
Distribution of documents based
on decision rights,
accountability, and incentives
The three primary partners, Registrar of Joint Stock Companies (RJSC),
National Board of Revenue (NBR), and City Corporation will have access
to respective document information based on the service a client avails
from the website.
Network Deployment
Step 1: Network Configuration
Initially we will introduce CA (Certificate Authority) to the blockchain. The CAs will generate MSP
(Membership Service Providers) certificates which will be designed as per the situation of our blockchain
network. In our network we will introduce one CA from BIDA. TLS CAs will be introduced for secure
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communication on the network. After introducing the CA, the organizations (RJSC, NBR, City Corporation)
will establish their units with unique MSPs created by the CA. For managing channels in the network for the
consumer and peers, we will set up a database modeled with MongoDB. Channels will be handled as private
between nodes and users based on the specifications as per the workflow for the information demands.
Step 2: Setting up a Kubernetes Cluster for resources
Kubernetes will enable us to set up containers of information in a distributed structure, in which way all the
dependencies will run in the same way from wherever we run it.
Step 3: Create identities and MSP using CA
We create an MSP document based on how the network will be distributed and the CA will register a user
and then enroll an identity. After that, users will be able to login using their username and password. The
CA will generate (public certificate and private key) which will help for sign in actions.
Step 4: Deploy the network
After compiling all the components required to create peers and ordering nodes, we create a Cloud
Kubernetes Service where we deploy the complete Kubernetes Cluster. We create a Blockchain Platform
Service instance on the cloud and store the resources necessary to function the network. After that, we
launch the Blockchain Platform once it is successfully deployed to the cluster. Then we introduce our admin
user identity from Digidesk and establish the MSP organization. The CA will then create identities and
certificates defining the organization. Finally, we register users with the help of CA and ultimately establish
the network for public use.
5. Distribution and Valuation
5.1 Distribution
Initiation Phase Month 1 - 14
1. Form a central special body for the project with representation from each stakeholder to oversee all the
processes, prepare workflow for any current process reengineering and advocate the collaboration between
RJSC, NBR, City Corporation with BIDA.
2. Set up private server for DigiDesk and start digitalizing and integrating financial and other records.
3. Create new IT infrastructure and update existing legacy systems for revised workflow.
Testing Phase Month 15 - 32
1. Form a team of experts and develop a prototype in the server.
2. Create Identity and Access Management.
3. Test the prototype using dummy information.
4. Run the full-scale prototype in a Mini verse within the server.
5. Start training and development sessions for government officials and improving the infrastructure.
Beta Phase Month 33 – 40
1. Include the digitalized records of previous businesses in the blockchain server and run the system.
2. Add the partners and start the beta version with dummy companies.
Final Phase Month 41 - onwards
1. Run a dedicated support and maintenance team 24/7 for any type of interferences.
2. Monitor and evaluate the system 24/7 by a team of skilled engineers using the on-premises servers.
3. Explore options to scale DigiDesk.
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5.2 Valuation and Financial Model
The revenue model comprises of two components – subscription fees and service charges. Approximately 58%
of the revenue will be generated from the subscription fees of corporate partners and institutional investors,
while 42% will be generated from service charge received from businesses. In the cost structure,
approximately 40% of the cost will be driven by salary, followed by training and development, as shown below:
Pro Forma Revenue Model
Revenue Stream Rate/Year Market Size Revenue % of Total
Subscription Fees
Corporate Partners 500,000 62 31,000,000 47.51%
Institutional Investors 25,000 250 6,250,000 9.58%
Service Charge
Registration of Companies 1,000 10,000 10,000,000 15.33%
Other Services 100 180,000 18,000,000 27.59%
Total 65,250,000
The total investment required for this venture is 76,860,000 BDT. The capital budgeting measures are as
mentioned below. The financial statements are elaborated in Appendix E.
Cost Item % of Total Cost Capital Budgeting Measures (BDT)
Salary 40.6% Required Investment 76,860,000
Rent 14.4% Pay Back Period ~7.5 Years
Utility 3.6% NPV 34,019,613
Training & Development 21.7% IRR 15.65%
Marketing 14.4%
R&D 5.3%
5.3 Social Value
Apart from the financial value that DigiDesk is going to generate, it will create the following social value:
• Agency costs are going to come down.
• There will be higher collaboration and coordination among different government bodies.
• Company identity and financial records will be verified and be kept safe. As a result, the number of
financial scandals and non -perming loans (NPL) are going to come down.
• Formalizing a business will become easier, cheaper, and faster. This will help to formalize the
economy, improve the rankings in Ease of Doing Business Index and bring in more FDI.
• Costs of credit for financial institutions will come down.
• Governance will be decentralized and will assist to realize the dream of Digital Bangladesh and the
SDG Goals 8 (Decent Work and Economic Growth), 9 (Industry, Innovation, and Infrastructure), and
16 (Peace, Justice, and Strong Institutions)
Appendix A summarizes the business model of DigiDesk.
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Appendix
Appendix A – Business Model Canvas
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Appendix B – Current Process of Starting a Business and Getting Bank Loans