lona2010 - Fotolia
Emirates Islamic Bank is applying blockchain and QR code technology to cheques to reduce fraud.
The Islamic financial services company will provide cheques with QR codes on them, which will be registered in a blockchain to provide authentication. The Cheque Chain initiative is aimed at reducing fraud related to cheques, which is a popular payment method in the United Arab Emirates (UAE).
“Blockchain has the potential to significantly increase security and protection in banking transactions,” said Suhail Bin Tarraf, chief operating officer at Emirates Islamic.
“We anticipate that Cheque Chain will dramatically reduce cheque fraud in this market, helping us to provide our customers greater peace of mind and security.”
This is part of the company’s digital investments, and the harnessing of blockchain mirrors efforts by other Middle East finance firms.
For instance, the National Bank of Abu Dhabi (NBAD) is using blockchain-based technology to transmit cross-border payments, and said it is the first in the region to do so.
Meanwhile, Abu Dhabi Securities Exchange (ADX) is using blockchain to provide controlled access to the annual general meeting (AGM) documents of listed firms to mobile devices.
Blockchain initatives fall inside the financial technology (fintech) revolution, which is beginning to take hold in the Middle East finance sector. Fintech investment in the region is set to grow by 270% this year, according to a report from Wamda Research Lab (WRL).
Blockchain explained – in the words of co-founder Nic Carey
Blockchain is a peer-to-peer network that allows multiple parties to transfer value in a secure and transparent way.
The technology allows us to create a system in which: no one can corrupt, sabotage or control the system; trust between participants is not necessary because it is embedded in the system itself; access to all relevant information is available to participants; and activity in the system is held to account through transparency.
The record of transactions on a blockchain is immutable, which means once a transaction is added, it cannot be altered or deleted. Moreover, the blockchain is maintained and validated by everyone who uses it, thus eliminating the need to trust a single central administrator.
These features guarantee the integrity of the system. With a few thousand lines of code, users can download apps on their phones that allow them to effortlessly make transactions with anyone else – as easily as sending an email.
The region is still in the early stages of fintech compared with more advanced economies, but the foundations are being laid.
The WRL and Payfort report found that fintech companies in the region expect to raise $50m this year, compared with $18m in 2016. It said the region’s fintech firms had raised only $100m over the past 10 years.
To put this into perspective, figures from Innovate Finance, the fintech trade body, found that a total of £936.5m was invested in UK fintech in 2016 and, in the same year, a massive $7.7bn was invested in the fintech sector in China and $6.2bn in the US.