Experts believe the banking sector would be the greatest beneficiary of Blockchain technology. It would aid financial inclusion and transform the way banks service people.
Of late, India’s information technology companies have been moving away from traditional IT services and experimenting with emerging technologies like Blockchain, deep learning, Artificial Intelligence, and more. TCS, IBM, Tech Mahindra, and even Microsoft have done it. The latest to join the bandwagon is Infosys.
The Bengaluru-headquartered firm has developed a blockchain solution for trade finance and is piloting it with seven of India’s leading private sector banks - ICICI Bank, Axis Bank, Kotak Mahindra Bank, YES Bank, IndusInd Bank, RBL Bank, and South Indian Bank.
The product known as ‘India Trade Connect’ is a document-tracking mechanism that will allow banks to manage trade documents digitally and bring down system inefficiencies, detect frauds, and so on. Two of the seven banks Infosys has tied up with are in the production-phase of the platform, while the others are still testing it.
Sanat Rao, Chief Business Officer, Infosys Finacle, told ET,
“Trade financing is document-heavy and process-heavy. The blockchain solution allows this to happen in a digitised manner. Because of the network effect, where a buyer, the buyer’s bank, the seller and the seller’s bank are all on the platform, it creates a single source of truth.”
The solution could be used to track international trade transactions too. Infosys is already exploring potential partnerships with the Indian divisions of several international banks and financial organisations. It is also in talks with RBI.
Blockchain in banking
While blockchain is gaining momentum industry-wide, experts reckon that the banking sector would be most impacted by it. “Because it is nearly real-time, it brings you a certain speed which is important in areas where historically it takes time to access information,” according to a Deloitte study.
Blockchain could also be a great driver of financial inclusion, say experts, and will transform the way the country’s unbanked and underbanked population is serviced by financial institutions.
Basudev Banerjee, Director - Industry Solutions at Microsoft India, told YourStory in a prior conversation,
“One of the predominant [Blockchain] use cases coming up is group insurance. Large banking organisations are using Blockchain for auto-claim insurance management. Some large proof of concepts and pilot projects are already being run.”
But, what the banking sector requires is a “vision document” from the government.
Madhivanan Balakrishnan, Chief Technology Officer, ICICI Bank (one of the seven banks deploying Infosys’ new solution) told YourStory,
“There are a plethora of blockchain technologies coming up. Allowing experiments by giving us access to specific data sets is the incentive we need. We can manage the funds ourselves.”
Incidentally, ICICI was the first Indian bank to deploy Blockchain-based solutions for international trade transactions back in 2016. It is also a part of the SBI-led BankChain that is building a community of banks for exploring and implementing blockchain solutions. So far, BankChain has 35 partner-banks and ten live projects.