Bank-Chain, India’s first Blockchain exploration consortium for banks was announced in Mumbai on 8th February, 2017. State Bank of India (SBI) has taken the initiative to take this effort forward as it believes that it is essential for banks to collaborate and develop Blockchain solutions for the betterment of the financial sector.
A spokesperson for SBI added that Bank-Chain will enable banks to explore, build and implement Blockchain solutions which can minimize fraud and maximize efficiency, security & transparency. Bank-Chain has been formed in collaboration with Primechain Technologies, a young Indian startup with a core focus on Blockchains.
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“Some of the quick action Blockchain use-cases include anti-money laundering, currency exchange and remittance, KYC, digital signature, communication of financial information”, says Shinam Arora, CEO, Primechain Technologies.
Axis Bank, Central Bank of India, DCB Bank, Deutsche Bank, HDFC Bank, ICICI Bank, IDBI, Kotak Mahindra Bank and Saraswat Bank have also shown an interest in collaborating for Bank-Chain.
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Some of the core benefits of Blockchain technology for the banking sector include better client satisfaction through faster, more convenient and secure services, minimization of fraud, maximization of efficiency, security and transparency, streamlining paper work, accelerated information and money flows, greatly improved auditability, streamlining paperwork and greatly improve auditability
Says Prasanna Lohar, Radical Change Agent, DCB Bank, “There is more to Blockchain than moving money. In the recent days, the country has seen a dramatic increase in Blockchain adoption/ awareness and the government’s openness to the technology can translate to a lenient regulatory view towards the Blockchain technology. Blockchain has the potential to transform our lives through its benefits i.e. faster settlement times that are user-optimized, lower collateral requirements and counter-party risk, improved contractual term performance, greater transparency for regulatory reporting, better capital optimization , reduction of operating costs and the fact that it is incorruptible. The recent trend is towards collaboration i.e. partnerships between competitive banks, technology companies, Fintech and regulators. This will bring benefits to consumers and the financial system. Collaboration among these different stakeholders will bring on multiple innovative and cost effective use cases in sections such as clearing & settlements , payments , smart assets , identity management, data management and data protection , AML and KYC and governance, which can lead to a sharing economy in the Indian banking sector. Post de-monetization, UPI and many other movements in innovations , Blockchain would be the “Radical Change Agent” in India.”
Banks can greatly benefit from using Blockchain technologies, as they can be used to remove a huge amount of paperwork and intermediaries. As the number of intermediaries get reduced, the advantages are tremendous. Hence, any transaction that involves lot of intermediaries is a good use case for Blockchain. This has huge cost implications. For example, a report from Santander InnoVentures claims that banks can slash infrastructure costs by $15-20 billion by 2022, by eliminating redundant activities.
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