A community of 27 banks is exploring blockchain solutions in India.
According to The Economic Times, State Bank of India (SBI) is to roll out beta launches of smart contracts enabled by blockchain technology by December 2017, followed by KYC (know your customer) processes.
22 banks in India and 5 Middle East banks have formed a group called BankChain, which aims to create innovative blockchain solutions for the banking industry. It was formed in February 2017, with SBI being the first member.
BankChain is a big move
Sudin Baraokar is the head of innovation at SBI, and he told The Economic Times: “By next month, we should have two beta production solutions ready for use by the 27 banks. We will also invite further participation. The beta production that will be ready are smart contracts, and second is KYC.”
He described BankChain as “a big move” and explained that the initiative is “derisking our [member banks’] investment in emerging tech, so that all banks can come and invest at once”.
The smart contracts will use the technology to maintain contracts between parties. As the agreements are public on the blockchain, they are also traceable, ostensibly eliminating the need for an enforcement agency.
Baraokar also revealed that SBI is planning to establish an innovation centre in Mumbai to look at emerging and developing technologies such as artificial intelligence and machine learning.
Blockchain is maximising efficiency
In May 2017, The Times of India reported that BankChain had launched a system called ClearChain for sharing customer information.
The system enables sharing of KYC data, investigation reports, suspicious transaction reports and cross-border wire transfer reports.
Shinam Arora is the CEO of Primechain Technologies, the company that is powering BankChain. He said: “Once implemented, the benefits of blockchain technology include maximisation of efficiency, security and transparency, and minimisation of fraud.”
Baraokar explained that SBI is looking at a myriad of ways to use blockchain technology, including targeting fraudsters. “We are exploring how blockchain can help in reducing fraud where a borrower takes a loan against the same asset from multiple banks.
“We are also looking at inward remittances and the use of blockchain as an alternative to systems like Swift.”
The adoption of this transformative technology by financial services in India looks set to continue and evolve as new applications are tested and implemented.
State Bank of India in Hyderabad. Image: fotosunny/Shutterstock