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Emirates NBD banking group is piloting the use of blockchain for transactions between UAE and India, as part of a pilot with IT supplier Infosys and India’s ICIC Bank.
The banks, which are both users of Infosys’s core banking platform Finacle, are piloting the supplier’s EdgeVerve blockchain framework for financial services for international remittances and trade finance transactions between the two countries.
International remittances are payments made by migrant workers to their home countries, while trade finance transactions are large and often international payments that traditionally require many participants, lots of paper and many couriers.
Through the blockchain network, the banks can automate inter-bank processes, securely exchange digital documents, and transfer invoices and purchase orders in a transparent and secure manner. It also offers dashboard-based monitoring.
During the pilot, remittance and trade finance processes were executed on the blockchain network with almost real-time transfers of invoices and purchase orders.
Emirates NBD chairman Shaikh Ahmed bin Saeed Al Maktoum said the pilot was the first of its kind for the banking sector in the UAE. “It demonstrates blockchain’s immense potential to change how organisations and governments conduct business,” he said. “We look forward to further collaboration with the public sector and our private peers to further adoption of this technology in the UAE.”
The pilot began eight weeks ago and additional use cases are now being explored.
Read more about blockchain
- Blockchain, the distributed ledger technology behind bitcoin, is both a threat and an opportunity for financial services – and banks are taking it very seriously.
- Abu Dhabi Securities Exchange offers controlled access to the AGM information of listed companies through a blockchain-based service.
- A panel of financial services experts discussed adoption of blockchain technologies at the Innovate Finance 2016 Summit.
Banks across the world are trying out blockchain for different processes. For example, working with startup bank Wave UK, Barclays recently tested the use of blockchain technology to complete a large trade finance agreement. This promises huge efficiencies compared to the heavily paper-based method currently used. There are substantial cost savings to be made on courier costs, and it could reduce the time taken to complete a trade from days to a few hours.
In March 2016, a global banking consortium including Barclays, RBS and HSBC completed cloud-based tests of five different blockchain technologies. Working with IT supplier R3, the banks tested trading using blockchain and cloud technology. The aim of the pilot was to see how distributed ledgers could be used commercially in global financial markets.
Also in the UAE, Abu Dhabi Securities Exchange recently announced it is providing controlled access to the annual general meetings documents of its listed firms to mobile devices through a blockchain-based electronic voting system.
Such examples of controlled blockchain use in specific processes are likely to continue for the next decade, according to IT analyst company Forrester. It does not believe full-scale, industrial-strength blockchain deployments are imminent, with banks currently preferring to put blockchain under the microscope in a lab environment.