Banking jumps to post blockchain
Tearing out the old plumbing of the global payments system and switching to distributed ledger is an enormous and potentially risky transition that could take a decade or more, but there may be an easier way to capture efficiency.
Every week now brings another announcement from the banking industry of a new distributed-ledger initiative seeking to transform the core operations of the global financial system.
At Sibos in Toronto last week, for example, IBM unveiled a new blockchain banking solution designed to reduce settlement times and costs for banks in processing cross-border payments.
The technology firm is partnering with Silicon Valley based Stellar.org and KlickEx, a New Zealand-based foreign exchange processing platform focused on often illiquid south Pacific cross-border payment corridors.
IBM has convened an initial group of banks including Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal Commercial Banking Corp. (RCBC) Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw (HK) of WorldCom Finance, as well as other financial institutions.
The vision is that in the future, the new network could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia. The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit and finalize transaction terms with immediate payment.