Quriosity Volume 09 Issue 07 by Quantinuum@simsr

Editor’s Note Welcome to the latest issue of Quriosity, the monthly newsletter of Quantinuum! Quantinuum, the Quant and Analytics committee of KJ Somaiya Institute of Management Studies and Research aims to empower students and professionals alike to organize and understand numbers and, in turn, to make good and rational decisions as future managers. The newsletter published monthly consists of articles which will enrich the young minds by informing about the contributions made in the field of Quants, Analytics, and mathematics. The objective of Quriosity is to publish up-to-date articles on data analytics, alongside relevant and insightful news. This way the magazine aspires to be vibrant, engaging and accessible, and at the same time integrative. This issue includes cover story on Bankchain and a sub-article on Forecasting basics. We also highlight the contributions of a quantguru – Maryam Mirzakhani (1977-2017). Curiosity updates inform about developments in space exploration in India as well as around the world. The issue also features other interesting quant fun articles and quant digest. If you wish to submit articles or news items, either individually or collaboratively, you are welcome to write to us at - quriosity.quantinuum@gmail.com Thank you and Happy Reading! Quriosity Editorial Team Quantinuum@SIMSR Mentor: Prof. N.S.Nilakantan (+919820680741) Email – nilakantan@somaiya.edu

Editorial Team: VVNS Anudeep (+919441201685) Khushbu Mehta (+919930158610) Kapil Gupta (+917727936906) Aditya Sharma (+918302525599) Samoshri Mitra (+918697440265) Dropad Saxena (+919582337930) Akshay Nagpal (+918800114925)

Team Leaders: Purav Shah (+917708521382)

VVNS Anudeep (+919441201685) Yatharth Jaiswal (+919969698361)

Contents TOPIC

PAG E NO

Cover Story BankChain – Embracing Future with Technology

by Priyakshi Mondal

Sub-article Forecasting – Understanding the basics

by Kiran Kumbhar

Quant Guru – Maryam Mirzakhani (19772017)

by Dropad Saxena

Quant Curiosity Update

by VVNS Anudeep and Kapil Gupta

News Digest

12 by Akshay Nagpal

Quant Fun

14 by Samoshri Mitra

Quant Connect

Quant Cover Story 3

BankChain – Embracing the future with technology

Banks and Blockchain: The right fit An HBR article says “Blockchain is a foundational technology: It has the potential to create new foundations for our economic and social systems.” Disruptive, Transformative, Dependable, Future-Proof are other keywords used by articles of similar likes. A blockchain is a peer-to-peer network that timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work. Blockchain technology can enable those people who are excluded to enter the global economy, allow people to "monetize their own information", protect the privacy of participants, and provide the capability to ensure creators are compensated for their intellectual property. Even though the Indian banking sector has become slightly fragile and marginal with the rising nonperforming assets (NPAs) and decreasing credit base, there are positives. Credit off-take has been rising ahead over the past decade, supported by strong economic growth, increasing consumerism, rising disposable incomes, and easier access to credit. In India, private sector banks are amongst the most highly valued globally. Three Indian banks – HDFC Bank, IndusInd Bank and Kotak Mahindra Bank are among the global top 5 in terms of Price to Book Value. Therefore, many experts have opined that the marriage between Blockchain and Banks could indeed solve many of the problem we face now. BankChain, an initiative started in February 2017 looks like a considerable step forward. So what is BankChain? BankChain is a community of banks for exploring, building and implementing blockchain solutions. Formed with State Bank of India as its first member, BankChain has 37 members and 10 live projects. All members get access to the node or source code of all BankChain projects. Members also get access to the training material, a dedicated private test blockchain, VIP invites to the annual Future Money Conference and invitations to exclusive events and technical training programs.

Figure: A PrimeChain node How is BankChain operated? BankChain is managed and operated by PrimeChain Technologies Pvt. Ltd, a blockchain startup in Bengaluru, founded in August 2016. They operate 8 permissioned blockchains. While Indian banks pay Rs.6 lakh as membership fees annually, foreign banks contribute $24,000 each. Members include, but not limited to, State Bank of India, HDFC Bank, ICICI Bank, The National Payments Corporation of India, and UAE Exchange. It has ▪ Microsoft as its exclusive cloud partner ▪ Intel as its preferred Technology Advisor ▪ IBM as its Integration Partner These members can nominate a stipulated number of members to the BankChain Regulatory, Technology and Business Committees which help in the governance. Projects underway Cross border remittance Primechain-P5 is a authorized blockchain for near real-time cross-border remittance at near zero cost. Some of the key features of P5 are: real world asset-backed crypto tokens providing liquidity; 100% API driven technology; full transaction history and a single source of truth; enablement of real-time monitoring by regulators, minimization of fraud and minimization of locked-in capital. LoU, Bank Guarantees, LC & other Documentary Credits Primechain- GUARANTEE, a blockchain for recording LoU, Bank Guarantees, Letters of Credit and other Documentary Credits has been launched in order to prevent frauds such as the recent Rs. 11,000 crore Letters of Undertaking (LoU) scam. Primechain-GUARANTEE records are stored in the blockchain in an encrypted form. Only those banks that have been "whitelisted" by the issuer bank can view the

records. This not only ensures data privacy and confidentiality but also ensures that records are shared only between banks that trust each other. Some of the other key active projects include 5

1. Corporate KYC and Charge Registry 2. Employee background verification 3. Document authentication, verification & storage 4. Vendor on-boarding 5. KYC (Individual) 6. Trade Finance (Documents) 7. Non-performing assets (NPA) and other stressed assets 8. Invoice discounting / supply chain finance / factoring Though there is a ton of hype around blockchain, the right way forward is to identify what can be profitably implemented. In a country like India, which is posed to be the next big power in the decades to come, blockchain and banks can indeed collaborate to give a push to many other domains currently lying unexplored in the fintech world. Some of these use-cases can be in Insurance ● Fraud Repository ● Agent Details Registry ● Claims Records Manufacturing ● Supply Chain Management ● Trade Finance Retail and e-Commerce ● Loyalty Programs References ● https://www.livemint.com/Industry/plB1lU0booCDVWyIkd8rOM/Banks-link-up-on-BankChainexploit-blockchain-solutions.html ● http://www.primechaintech.com/docs/Blockchain_8_steps.pdf ● http://www.bankchaintech.com/docs/brochures/bankchain.pdf

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By Priyakshi Mondal PG-Finance, 2017-19

Sub Article Forecasting – Understanding the Basics Forecasting is a very important activity for any business because on the basis of the forecast future planning is developed. Forecasting is the process where companies use historic data to determine future business trends. They use forecasting to allocate budgets and plan for anticipated expenses. If forecasts are not accurate it will obviously have an adverse impact on the future of the business. So, making an accurate forecast is very important for any business. There are two major types of forecasting approaches: Qualitative Approach and Quantitative Approach. As the name indicates, Qualitative models are based on qualitative information. So, people who have been working for a really long time in a company develop an expertise for certain things which could be a good source of information. Similarly, people with a lot of technical knowledge can also help develop a good forecast. Similarly experience and intuition can also help. Since all these are qualitative it can vary from person to person. Qualitative models include:  Delphi Method: Here, questions are developed and shared with certain fields experts and depending on the answers received the questions are adjusted. This process is iterated until consensus is achieved.  Executive Opinion: Senior managers are approached to gain insights into various market trends which helps in generating forecasts for the company.  Salesforce Opinion: Since they are constantly in touch with the customers, their opinion is very valuable and sometimes accurate. The only disadvantage is that they underestimate the demand so that they can meet their target.  Market research: Creating a consumer survey in order to predict the demand for a certain product in the future. Quantitative models try to discount the expert factor and remove the human element out of the analysis. These models are concerned solely with the data to avoid fickleness of the people. They are broadly classified into two categories: Time series and Causal method.  Time series: Here, one of the variables should be time. It further includes the following methods: 1. Moving Averages: It is one of the most widely used technique. Here, we simply take the arithmetic mean of the last two observations to get the forecast for the next observation. For example, if the observed sales for week 1 and 2 are 8 and 10 respectively, then the forecasted sales for week 3 can be simply given by the arithmetic mean of these two i.e. = 9. We can also assign weights to the observations. 2.

Exponential Smoothing: This is another method of forecasting involving weights. The formula used is

where, is the smoothing constant and . If closer to 0 it means that more weightage is given to past data points and if it is closer to 1 it means that more weightage is given to current data points. is the actual data point in period t is the forecasted data point in period t 3.

Exponential Smoothing with Trend Adjustment: Also known as adjusted Exponential smoothing, it consists of exponential smoothing forecasting with a trend adjustment factor added to it. Here, we first calculate the trend for the next period

where is smoothing constant and . If closer to 0 it means that more weightage is given to past trends and if it is closer to 1 it means that more weightage is given to current trends. is the trend factor for the period t 7

The adjusted forecast is then given by 

Causal Methods: It consists of Linear Regression and Multiple Regression. Linear regression is used when we have one independent variable and one dependent variable. Multiple Regression is used when we have one dependent variable and several independent variables. On a conceptual level, all business forecasting follows a similar process. A problem is chosen: This can be either be "will people buy a high-end coffee?" or "what will our sales be next year?" Theoretical variables and an ideal data set are chosen: This is where the forecaster identifies the relevant variables that need to be considered and decides how to collect the data. Assumption: To cut down the time and data needed to make a forecast, the forecaster makes some explicit assumptions to simplify the process. A model is chosen: The forecaster picks the model that fits the dataset, selected variables, and assumptions. Analysis: Using the model, the data is analyzed and a forecast made from the analysis. Verification: The forecaster compares the forecast to what actually happens to tweak the process, identify problems or in the rare case of an accurate forecast, pat himself on the back. Historic data is all that we have in order to make a forecast and there is no guarantee that the conditions in the past are going to repeat themselves this time. It is also impossible to consider unique and unexpected events. Forecasting can be a dangerous art, because the forecasts become a focus for companies and governments, mentally limiting their range of actions, by presenting the short to long-term future as already being determined. Moreover, forecasts can easily break down due to random elements that can't be incorporated into a model, or they can be just plain wrong from the start. The negatives aside, business forecasting is very useful. Appropriately used, forecasting allows businesses to plan ahead of their needs, raising their chances of staying healthy through ups and downs. References:

https://www.investopedia.com/articles/financial-theory/11/basics-business-forcasting.asp http://www.prenhall.com/divisions/bp/app/russellcd/PROTECT/CHAPTERS/CHAP10/HEAD03.HTM By Kiran Kumbhar MMS Marketing (2017-19)

QuantGuru Maryam Mirzakhani (1977-2017) Maryam Mirzakhani was born on May 3 1977 in Tehran, Iran. She was an Iranian mathematician who was the first woman and the first Iranian to be awarded a Fields Medal. She was awarded for her outstanding contribution to the “dynamics and geometry of Riemann surfaces and their moduli spaces”. She won gold medals in the years 1994 and 1995 in International Mathematical Olympiads for high-school students. She attained a perfect score in 1995 in the Olympiad. She pursued B.Sc. course in Mathematics from the Sharif University of Technology in Tehran. Later she went on to pursue Ph.D. from Harvard University and worked on the dissertation titled “Simple Geodesics on Hyperbolic Surfaces and Volume of the Moduli Space of Curves”. At the Princeton University she worked as an Assistant professor of Mathematics. In 2008, she became a professor at Stanford University.

Mirzakhani’s work was concentrated on the study of hyperbolic surfaces by means of their moduli spaces. In hyperbolic space, in contrast to normal Euclidean space, Euclid’s fifth postulate that is, one and only one line parallel to a given line can pass through a fixed point, does not hold. In nonEuclidean hyperbolic space, an infinite number of parallel lines can pass through a fixed point and even the sum of the angles of a triangle in hyperbolic space is less than 180°. In 2008, Mirzakhani married Jan Vondrák, a Czech theoretical computer scientist who currently is an associate professor at Stanford University. They have a daughter named Anahita. She described herself as a “slow mathematician” and wrote formulae around the drawings. In 2013, Mirzakhani was diagnosed with breast cancer. In 2016, the cancer spread to other organs and she died on 14 July 2017 at Stanford Hospital in Stanford, California. Upon her death, Iranian president Hassan Rouhani and other officials expressed condolence messages and praised her works in the field of Mathematics. Sharif University of Technology, the institute where Mirzakhani studied, renamed its faculty of mathematics to "Mirzakhani” in honor of her. References: https://www.britannica.com/biography/Maryam-Mirzakhani http://www-history.mcs.st-andrews.ac.uk/Biographies/Mirzakhani.html By Dropad Saxena PGDM (2017-19)

Curiosity Update ---- This updates readers on space exploration around the world including our own ISRO’s efforts..

A storm of tiny dust particles has engulfed much of Mars over the last two weeks and prompted NASA's Opportunity rover to suspend science operations. But across the planet, NASA's Curiosity rover, which has been studying Martian soil at Gale Crater, is expected to remain largely unaffected by the dust. While Opportunity is powered by sunlight, which is blotted out by dust at its current location, Curiosity has a nuclear-powered battery that runs day and night. The Martian dust storm has grown in size and is now officially a "planet-encircling" (or "global") dust event. Though Curiosity is on the other side of Mars from Opportunity, dust has steadily increased over it, more than doubling over the

week. The sunlight-blocking haze, called "tau," is now above 8.0 at Gale Crate, the highest tau the mission has ever recorded. Tau was last measured near 11 over Opportunity, thick enough that accurate measurements are no longer possible for Mars' oldest active rover. For NASA's human scientists watching from the ground, Curiosity offers an unprecedented window to answer some questions. One of the biggest is: why do some Martian dust storms last for months and grow massive, while others stay small and last only a week. Curiosity, plus a fleet of spacecraft in the orbit of Mars, will allow scientists for the first time to collect a wealth of dust information both from the surface and from space. The last storm of global magnitude that enveloped Mars was in 2007, five years before Curiosity landed there. Curiosity's engineers, have studied the potential for the growing dust storm to affect the rover's instruments, and say it poses little risk. The largest impact is to the rover's cameras, which require extra exposure time due to the low lighting. The rover already routinely points its Mastcam down at the ground after each use to reduce the amount of dust blowing at its optics. JPL leads the Mars Science Laboratory/Curiosity mission.

By Kapil Gupta PGDM (2017-19)

Quant News Digest IIIT-B Student Bags ₹1.2 Crore Residency with Google AI A 22-year-old student from International Institute of Information Technology, Bengaluru (IIIT-B) achieved a rare feat this week when he landed a residency at the prestigious AI Google Residency Program. And his gigantic reward is a salary package of ₹1.2 crore per annum. IIIT-B’s Aditya Paliwal was one of the 50 students selected from a pool of 6,000 participants from across the world this year. Originally from Mumbai, Paliwal was studying integrated MTech dual-degree programme of five years from 2013 to 2018 at IIIT-B. The Google AI Residency Program is a 12-month research training role designed to jumpstart or advance the resident’s career in machine learning research. The programme was created in 2015 with the goal of training and supporting the next generation of deep learning researchers.

Is Google Planning To Foray Into The Call Centre Sector With Their AIPowered Duplex? When Google CEO Sundar Pichai introduced Duplex to the world at their annual I/O conference in May earlier this year, many were left speechless. That would be perfectly all right in this case because Google Duplex is an AI-based assistant which is designed to make phone calls on your behalf to schedule appointments, make reservations in restaurants or purchase holiday tickets. “We understand and value the discussion around Google Duplex — as we’ve said from the beginning, transparency in the technology is important… While we’re not widely launching this feature yet, we’re sharing more information about this technology to provide transparency and encourage feedback. It’s important that we get the experience right both for people and for businesses, and we’re taking a slow and measured approach as we incorporate learnings and feedback from our tests.” 10

Baidu Releases New AI Chip in Its Annual Event ‘Create 2018’ China’s largest internet search giant Baidu released a new AI chip called ‘Kunlun’ in its second annual developer conference Baidu Create 2018. This marks the company’s latest venture into AI on top of FPGAs, cameras and other related technologies. With the chip, Baidu aims to provide an exclusive hardware for machine learning applications. Just like Google Brain, Baidu also has its own platform for AI research and development, where it is rigorously tapping into subfields of ML such as deep learning, computer vision, natural language processing, among others. In addition, the tools and publications brought out by the Baidu research team are made accessible to public so that AI developments are made aware among them. With more and more investments pooling into Chinese firms and advancements in technologies such as AI, China has cemented its position as an AI force to reckon with.

RPA Company Automation Anywhere Raises $250 Million in Series A Funding Automation Anywhere, a noted company in the robotic process automation (RPA) field announced that they had completed their Series A financing round of $250 million led by New Enterprise Associates, Goldman Sachs Growth Equity; with participation from General Atlantic and World Innovation Lab. This investment has brought the company’s post-money valuation to $1.8 billion. A statement published by Automation Anywhere claims that this is one of the largest Series A rounds on record for an enterprise software company. With this investment, Automation Anywhere plans to deepen their customer engagement and deploy its technology in additional geographies. Building on its core product offerings, the company will further work on specialized machine learning capabilities and sophisticated artificial intelligence integrations to drive higher operational efficiency, increased agility and flexibility to scale up-and-down anytime.

Reliance to Acquire US-Based Radisys for $74 Million, Plans to Accelerate 5G, IoT Growth Reliance Industries Limited is set to acquire US-based Radisys, a noted open telecom solutions provider for a whopping $74 million. According to a statement released by Radisys, they have entered into a “definitive agreement” under which RIL will acquire Radisys for “$1.72 per share in cash.” “Reliance and Jio have been disrupting legacy business models and establishing new global benchmarks. Radisys’ top-class management and engineering team offer Reliance rapid innovation and solution development expertise globally, which complements our work towards software-centric disaggregated networks and platforms, enhancing the value to customers across consumer and enterprise segments,” said Akash Ambani, director of Reliance Jio in a statement. “This acquisition further accelerates Jio’s global innovation and technology leadership in the areas of 5G, internet of things and open source architecture adoption,” he added.

AI Task Force submits report to Defence Min on using AI for achieving Military Superiority The Artificial Intelligence Task Force from the Ministry of Defence submitted their final report to Union Defence Minister Nirmala Sitharaman on using AI to increase Indian military’s superiority. The AI Task Force, led by Tata Sons chairman N Chandrasekaran, said in the report: “AI has the potential to transform national security. It is also seen that AI is essentially a dual-use technology. While it can fuel technology-driven economic growth, it also has the potential to provide military superiority. India has strong IT industry and huge talent pool of engineers which are advantages which need to be 11

leveraged. Ministry of Defence has already initiated the process of preparing Indian defence forces in their use of AI and how these capabilities can be increasingly developed within the country Source: http://analyticsindiamag.com/

By Akshay Nagpal PGDM (2017-19)

Quant Fun

Solution

July 2018 Quantinuum, the Quant and Analytics committee of KJ Somaiya Institute of Management Studies and Research aims to empower students and professionals alike to organize and understand numbers and, in turn, to make good and rational decisions as future managers. The newsletter published monthly consists of a gamut of articles for readers ranging from beginners to advanced learners so as to further enrich the young minds understand the contributions made to the field of mathematics along with a couple of brain- racking sections of Sudoku to tickle the gray cells. For any further queries and feedback, please contact the following address: KJ Somaiya Institute of Management Studies and Research, Vidya Nagar, VidyaVihar, Ghatkopar East, Mumbai -400077 or drop us a mail at quriosity.quantinuum@gmail.com Mentor: Prof. N.S.Nilakantan (+919820680741) Email â&#x20AC;&#x201C; nilakantan@somaiya.edu Team Leaders: Purav Shah (+917708521382)

VVNS Anudeep (+919441201685) Yatharth Jaiswal (+919969698361)