The cryptocurrency boom and other industries following the trend have propelled banks to adopt blockchain technology. Some of the world’s largest banks such as HSBC, Barclays, and the Swiss banking giant USB, have ventured on to develop a Blockchain technology powered paywall. US Federal Reserve has also hinted towards reinforcing its obsolete infrastructure with innovative systems using DLT and cryptocurrency-enabled financial transactions.
Most American companies like JPMorgan Chase are still studying and testing the new use cases, but there are many banks where Blockchain implementation has been done to conduct daily transactions.
(Also Read: Central Bank of China To Hire Blockchain Experts )
Leading banks in India and Israel have recently announced a partnership on Blockchain with Silicon Valley powerhouses like Ripple and Microsoft. These countries are progressing to show the world what a blockchain powered economy could look like.
Ripple India’s new Country Manager at Mumbai office, Navin Gupta, has revealed the plans of the company to enable multiple use cases throughout India by the end of the year. Yes Bank and Axis Bank are already working with Ripple’s blockchain network, and there are ongoing talks with several other Indian banks as well as financial service providers.
Gupta said, “Countries like India are leapfrogging because they are skipping the landline phase.” In its second phase of business strategy in India, Ripple strives to enable cross-border remittance through small businesses beyond banks, outgoing transfers included.
Suggested Read: Ripple Set’s Up New Office in Mumbai, India
Indian banks face significant issues with remittance. As per the World Bank, India is the prominent recipient of global remittance62.7 billion in total, in 2016. Usually, it takes expats up to two days. But, Ripple’s partnership with dozens of banks globally allows almost instant transfers, even for customers who do not hold an account at these blockchain-friendly banks.
Chief Information Officer at Yes Bank, Anup Purohit, said, “We set up a Ripple node here in India. We will instantly credit money to the benefiting account for almost any account in India.”
He clarified that the whole process could take up to an hour, depending on the receiver’s bank. Currently, Yes Bank manages assets worth $35 billion nationwide. Aside from Ripple’s blockchain to facilitate cross-border transfers, Yes Bank is also implementing several other unique blockchain solutions, like systems for trade finance and supply chain finance.
Bajaj Electricals is their enterprise customer. They are also working with hundreds of other suppliers. The bank offers them blockchain that provides delivery orders, streamlined invoices, instant payment and supply chain tracking.
“The time saved is immense. This entire process used to be manual. Purchase order, invoice…it would take the invoice 10 to 15 days to be accepted and complete payment. It could sometimes take 90 days for suppliers to receive credit. Now we immediately fund their account online. It’s almost instant.”
Blockchain technology in India is also supported by the country’s government as a key part of its economic strategy. Purohit confirmed meeting with the central regulatory Bank of India and participating in bullish conversations about DLT. Summarizing the meeting’s bottom line, he said: “We should, as a country, promote blockchain technology.”
In addition to India, banks in other countries are also taking blockchain seriously. The Thai Central Bank met Ethereum creator Vitalik Buterin; and Microsoft announced an alliance with Israel’s largest bank, Bank Hapoalim.
There have been proof-of-concept experiments by IBM in Australia and New Zealand. Taking a step further from trials, Hapoalim has revealed its plans to implementing them by the end of the year.
CTO of Bank Hapoalim, Yoav Intrator, said: “I don’t know any area that doesn’t need guarantees.”
Yoav Intrator further added:
“There’s no way to change the process without the cooperative approval of the Bank of Israel. So we are actually working fairly closely to be able to do it. It was clearly a significant interest for them, businesses, as well as for us, to be involved in the larger picture, what I call the future smart economy…It is a Win-Win-Win proposition.”
Hapoalim is working on several other blockchain projects in association with Microsoft and others, some of which could be launched in the market in a couple of months. Hapoalim is also under a unique partnership with the prestigious Israel Institute of Technology, Technion. The institute often hosts blockchain giants like Ethereum creator Vitalik Buterin, and Zcash CEO Zooko Wilcox. Many of the Technion’s professors, including Eli Ben-Sasson, are widely acknowledged blockchain experts.
Intrator said, “At a lab in the Technion, our data scientists work with their data scientists. There is a significant shortage of data scientists worldwide.”
The partnership is unique as it is rare to find any bank that lets an academic institution to study and experiment with real-data.
Thinking about the future of blockchain-powered financial services in India, professionals like Gupta envision small business having easy access to global payments. Any payment will be processed instantly with transparent conversion rates, thus favoring both the buyer and the seller.
He considers blockchain networks as highways where fast driving is possible. Purohit, Gupta and Intrator, all three see the possibilities with blockchain technology in banking, with the distributed ledger becoming mainstream technology in less than a year.
Steady yet rapid
Blockchain is evolving at rapid, but it will take some time to spread nationwide. Intrator believes blockchain technology as a platform for building trust when it comes to smart contracts for bank guarantees or instant money transfer.
“Blockchain creates a great vehicle to integrate and to streamline businesses between banks, financial institutions and others. Here’s the protocol, here is how things will behave, and that’s the way things will actually operate…I believe eventually we will move towards decentralized bank data too, which will likely also be driven by cyber security reasons.”
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