The banking industry’s fascination with blockchain technology is a well-known fact. The Indian banking sector has finally caught the blockchain bug. According to reports, the largest public sector bank in the country, State Bank of India has decided to venture into the digital ledger technology domain along with few other leading banks and technology companies.
The announcement follows the recently concluded Reserve Bank of India’s pilot blockchain project. The project involving the use of blockchain technology for trading application was conducted by the central bank’s research arm — Institute for Development and Research in Banking Technology and Monetago, a blockchain company. The Indian news media has reported a collaboration between the State Bank of India, IBM, Microsoft, Skylark, KPMG and ten other commercial banks to create the Bankchain.
The primary purpose of the proposed Bankchain is to facilitate information sharing among the banking institutions that are part of the network. It is expected to help the organizations tackle frauds while streamlining the lending process. The initial application of Bankchain will involve trade finance sector, preventing businesses from presenting merchant discounts bills showing the same invoice to multiple banks.
The public banking sector in India is riddled with bureaucratic red tape, and the State Bank of India’s move to be part of the innovative technology revolution signifies a big move. The country’s banking sector is not new to blockchain technology. Few leading banks like ICICI, Yes Bank, and Axis Bank are already exploring blockchain-based applications for their operations.
ICICI Bank recently announced its partnership with the Stellar platform to create a blockchain based application for fund transfer. Similarly, Axis Bank is working with Ripple to use blockchain solutions for cross-border fund transfer.
The development and implementation of distributed ledger technology based applications into the operations will help Indian banks to keep up with the developments in the international banking industry. Leading banks from across the world are already invested in such technologies either on their own by being part of consortiums. The R3 Consortium is one such working group, which recently joined Hyperledger project to create open source blockchain banking and financial solutions.
The new developments in the Indian cryptocurrency ecosystem will provide an opportunity for the existing Bitcoin platforms in the country to diversify their services and explore ways to work with the mainstream banking sector.
Ref: Financial Express | Image: NewsBTC