Emirates NBD and ICICI Bank will be the first banks to pilot a network for international remittances and trade finance built on blockchain technology in the Middle East region, following an announcement on October 18 that they will be launching the pilot through working in partnership with Infosys. By collaborating with Infosys’ subsidiary, EdgeVerve Systems, the banks will be able to capitalize on its strong presence in the financial sector.
The model is a permissioned, asset-agnostic ledger, designed to suit the needs of the banking sector. The applications created on this pilot blockchain aim to boost automation across inter-organizational processes, transactional security, and accuracy at a considerably lower cost.
The network was successfully piloted using the ‘EdgeVerve Blockchain Framework for Financial Services‘ on the UAE-India corridor, which is one of most frequented corridors for both of the banks and indeed globally, with over $70 billion transacted bilaterally according to the World Bank.
Regarding the announcement of the blockchain pilot on October 18, Dr. Vishal Sikka, CEO & Managing Director of Infosys stated that the successful test and launch of the blockchain pilot represents a first step toward mainstream adoption in the region, “We are delighted to partner with ICICI Bank and Emirates NBD, who are innovation leaders in their respective regions. We look forward to further collaborations with our clients and other banks to create a blockchain-powered consortium in the financial services industry.”
“With this pilot, we are clearly a step closer to see mainstream adoption of blockchain-based applications.”
Both Emirates NBD and ICICI banks already use Infosys’ Finacle solutions suite, a universal banking solution that presently serves 16.5 percent of the global ‘banked’ adult population. The Chairman of Emirates NBD, His Highness Shaikh Ahmed bin Saeed Al Maktoum, explained his thoughts on the blockchain pilot:
“Our pilot project with Infosys Finance and ICICI bank, a first for the banking sector in the UAE, demonstrates blockchain’s immense potential to change how organizations and governments conduct business. We look forward to further collaboration with the public sector and our private peers to further adoption of this technology in the UAE.”
The Managing Director & CEO of ICICI Bank, one of the largest private sector banks in India, Ms. Chanda Kochar expressed, “I am delighted that we are the first bank in India and among few globally to set up a blockchain application. We have also marked a milestone by piloting a blockchain network with Emirates NBD and Infosys Finacle as partners and have successfully executed cross-border open account trade finance and remittance transactions.”
Kochar also envisions blockchain playing a critical role in banking in the next few years, where she also stated:
“I envision that the emerging technology of blockchain will play a significant role in banking in the coming years by making complex bilateral and multilateral banking transactions seamless, quick and more secure. Going forward, we also intend to work on expanding the blockchain ecosystem and create common working standards to contribute to the commercial adoption of this initiative.”
The process of the pilot began toward the end of August, where further research is currently being conducted to explore other uses of the blockchain. A number of financial institutions have demonstrated their interest to participate and expand their transaction network through the use of blockchain technology. Given Finacle suite solutions are already reputable in the financial industry, banks that collaborate with EdgeVerve for the pilot could realize the following benefits:
- The presence of a blockchain network leads to a significant reduction in costs. For example, both banks anticipate automation of internal bank process such as smart contracts, secure digital exchange of documents and through the integration of dashboards allowing monitoring of positions in real time.
- The blockchain platform is designed to transfer remittances, trade finance purchase order as well as invoice financing processes. Thus, it will provide a secure and transparent transfer of invoices along with purchase orders in real time.
- Systems already in place at both banks, amongst others, such as the Finacle universal banking suite along has been integrated into the pilot blockchain system.
- The network is modelled to provide the fluency to current systems and processes to run on blockchain effortlessly. Therefore banks can easily plug in their systems and processes onto the powered network, reducing complexity.
While this is not the first blockchain pilot of its type in the world, it marks a major milestone, as the Infosys, Emirates NDB and ICICI partnership is the first of its type in the Middle East and North Africa region. Further, the government in Dubai recently stated their intention to use blockchain technology to outgrow outdated, paper methods of administration, demonstrating the UAE’s emerging role as a leader in the space. With both Emirates NBD and ICICI banks seeking other members to add to the transaction network and test out the private blockchain for trade finance and remittances, it goes to show the technology that powers Bitcoin is already gaining traction throughout the world.