From Asia to Africa, South America, Banks Team-up on Blockchain
A conglomerate of major banks across three main continents including Asia and Africa have teamed up to collaboratively research on distributed ledger and blockchain technology as part of a developing global digital economy.
The multilateral cooperation agreement involves member development banks of BRICS countries -Brazil, Russia, India, China and South Africa- which include Banco Nacional de Desenvolvimento Economico e Social (BNDES), State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank); China Development Bank Corporation, Development Bank of Southern Africa and Exim Bank of India.
They jointly constitute a working group that will formulate a research agenda and targeted outcome as they identify potential applications of the distributed ledger/blockchain technology in the financial sector, particularly for infrastructure financing. Aside cooperation, they seek to speed up and simplify their operational processes which is expected to cut down the cost of cross-border payments using blockchain. It can also help achieve greater transparency and immutability which can enable banks significantly reduce their cost of service to small and medium-sized customers.
“Effective implementation and scaling of use cases built on Blockchain technology requires compelling collaborations across borders and industries,” says the Chief Information Officer at YES BANK in India, Anup Purohit, via email. He adds that the collaborations enable increased operational efficiency and new business models citing his bank’s pioneered and successfully-commercialized blockchain for supply chain financing which it was able to achieve by harnessing the power of alliances and relationships.
Several notable financial institutions have shown interest in the evolving blockchain technology with some of them already experimenting functional proof-of-concept projects with in applications like internal payments, trade finance and custody, most of them are not yet ready for primetime, according to PwC. Meanwhile, as it is the case with several other financial institutions, Purohit’s bank is also exploring other use cases of blockchain for trade finance, crypto digital identity management and cross-border remittances as a part of industry consortiums.