Friday, 03 April 2020
Sovrano

How could blockchain change the financial industry?

A working example is Visa’s B2B Connect platform, which was launched last June in more than 30 markets.

The solution, which is built on a private blockchain developed by IBM, helps businesses to make faster cross-border payments to each other.

But it also promises to improve protection of an organisation’s sensitive data, including banking details and account numbers, sidestepping the vulnerabilities to fraud that exist when sending cheques, automated clearing house payments and wire transfers.

It is not just digital payments that stand to benefit. In January, a host of banks, including HSBC, BNP Paribas and ING, launched Contour, a blockchain-inspired platform designed to make the $18-trillion trade finance market more efficient and secure.

With blockchain, we replace a knowable risk with a black box and have to trust the technology to do the right thing

Its primary aim is to digitise so-called letters of credit (LoCs), which are issued between banks, typically across borders, as a guarantee for payments between companies that want to trade goods or services.

Under the existing system, issuing, verifying and tracking LoCs is a largely paper-based, cumbersome and costly process that has seen little meaningful change for at least a century. Each party in a transaction, and there could be many, also has to keep and verify their own separate paper records which, among other things, can give rise to fraud.

“Contour effectively eliminates the reliance on paper documents, automates manual data capture and reduces the risk of errors and fraud,” says Vinay Mendonca, global head of trade products and propositions at HSBC.

“It also provides clients with access to faster, simpler trade finance and can help them achieve working capital gains.”


source: raconteur.net

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