India’s leading private bank, ICICI Bank, in a press release on April 17, 2018, disclosed it had amassed 250 corporates onto its blockchain platform for trade finance. It is touted as the largest blockchain congregation from a major bank in the country. Many Indian corporates are warming up to the decentralized and secure nature of the blockchain and the success of this initiative will only take the case for Indian businesses forward.
Blockchain as a tool is highly efficient for repetitive and uniform tasks and is ideally suited for transactions processing in the financial industry. ICICI’s blockchain is aimed to streamline its operations on domestic and international trade finance transactions wherein a number of clients from the S&P BSE 100 Index are now part of this customized blockchain.
ICICI Bank had started doing pilot transactions in August 2016, in international trade finance and remittance, in partnership with Emirates NBD.
With confidence and iterations of the process, the number of corporate participants willing to participate has grown to 250 to have an efficient, cost-effective and secure method to conduct trade finance. Blockchain helps in simplifying the paper-intensive nature of trade finance by giving a common platform to all participants and enabling individual processing and decision making in real-time.
Transactions on blockchain are quick and accurate and sending couriers of paper documents across cities and countries, redundant. Verification is done quickly through trade intermediaries as they are also a part of the blockchain. All this will bring down the timelines for processing a trade loan wherein currently one needs to wait for receipt of long paper trails for domestic and international processing.
Various transactions have been carried out by the corporates on the blockchain like cross-border remittances of salary payments to employees in other countries, vendor payments in another city, and payment for inventory from another city to name a few.
The bank’s MD & CEO, Chanda Kochhar also commented-
“In another initiative, we are also collaborating with peer banks and other partners to create a comprehensive ecosystem in the industry using blockchain and evolve common working standards to contribute to the even greater adoption of this initiative.”
This single source of all trade finance information will be accurate, electronic, distributed and unalterable which gives it the credibility of being sanitized. All participants can view the data and process online, real-time across countries along with information available from all locations and branches of ICICI. Participants can track their documents and authenticate the ownership of assets digitally. They can transact a trade finance requirement through smart contracts – series of digitally encrypted and secure contracts. The participant can check the status of the application and transmission of the original trade documents through a secure network.
Other New Initiatives by the Bank
The next organic step for the bank would be to create another blockchain with external banks to increase the scope of the existing systems for its use for trade finance. The bank seeks to invite various participants and stakeholders of such future initiatives – buyers, sellers, logistic partners, insurance companies, and various other entities involved in regulating and monitoring blockchain.
The use of blockchain technology establishes ICICI Bank as a pioneer of blockchain technology in banking in the Indian fin-tech circles.