It was only yesterday that we had reported about how business world biggies Cisco Systems Inc, Bosch Ltd and several others have formed an Internet of Things consortium to brainstorm on how blockchain technology can be used to secure and improve IoT applications. And now, some of India’s largest banks have joined hands to build a consortium aimed at testing an interbank blockchain platform.
The move, which is expected to further strengthen the country’s cutting edge adoption of bitcoin’s underlying technology, has come just a couple of weeks after RBI’s research arm, the Institute for Development & Research in Banking Technology (IDRBT), had published a white paper report stating that it had successfully tested the blockchain technology for core banking processes in the country in a pilot and stated that now the time is right for the technology’s wide adoption in India.
The Indian banks which are actively involved the larger pilot are currently working with MonetaGo, a New York-based startup, which will be providing the platform. It is important to note that startup also dispensed the duties of a technology provider in IDRBT’s pilot.
Speaking to ET, Jesse Chenard, CEO of MonetaGo has said that the startup is soon
going to start a pilot with about 15 of India’s largest banks to test out the platform. While the banks have been individually doing work on their own blockchain pilots, MonetaGo will create a platform that everyone will be building on.
The names of all the members of the consortium are still unknown, but according to experts there would soon be an announcement about the same when the pilot gets officially kickstarted. However, MonetaGo’s CEO in his conversation with ET revealed that all the banks involved in the consortium make up for more than 80 percent transactions in the country.
For the unversed, a blockchain is basically an anonymous online ledger that makes use of a data structure to make the process of transaction an easier and simpler process. It provides users the ability to manipulate the ledger in a safe way without seeking the support of a third party. It is said to ensure maximum transparency, zero errors in the process, and significantly reduce turnaround times.
A blockchain system, unlike the currently existing technology systems allows the banks to maintain a copy of the transactions. As and when a transaction occurs, the blockchain system updates all the records simultaneously, thus doing away with the need and work of reconciling transactions between different banks.
MonetaGo’s CEO Chenard in his conversation with the Indian economic daily also said that since his startup’s platform integrates with the banks’ existing technology systems, it makes it easier for the banks to adopt the platform. According to him, the pilot, which he expects will be lasting about nine to twelve months, would be costing a bank a fraction of a million dollars.
While a fraction of a million dollars does sound a big amount, but according to Chenard, once this becomes a working consortium model, banks that will be putting in more servers and computing would be soon paid back by the banks that are making a use of the technology.
The platform is expected to take about six months to set up and get into production. Then, it is most likely take another three months or so to share the data and talk to the different governing bodies in the country.
While a lot of different sectors are currently working towards ways through which they can make use of the blockchain technology, it is the financial sector that is currently fairing much better than any other sector in making efficient use of the technology.
The year started with Yes Bank announcing the usage of blockchain technology for vendor financing, which was followed by Axis Bank announcing the usage of blockchain solutions for its operations just a few weeks later. While Yes Bank and Axis Bank began their blockchain journey this year, it was the ICICI Bank that had first announced about using the blockchain solutions for international trade finance and remittances in October last year.