IBM develops blockchain system for banks
The company expects to process up to 60% of all cross-border payments in the South Pacific by early 2018.
International technology company IBM has joined forced with blockchain startup Stellar and payments company KlickEx Group to enable high-speed cross-border payments for banks and other financial institutions.
The aim of the payments process is to speed up clearances and settlements on a single network in real time.
Blockchain, the technology behind bitcoin, is a revolutionary distributed-ledger technology that offers a secure and immediate way of transferring a range of data - more specifically, in this case, currency transactions.
IBM's solution is already active, processing live transactions across 12 different currency corridors between the Pacific Islands and Australia, New Zealand and the United Kingdom, with the goal of expanding capabilities.
For example, IBM said that in the future, its service could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia, while covering all aspects of their transaction, not just the payment.
“The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalise transaction terms with immediate payment, conducting global trade with transparency and relative ease,” IBM said in its latest press release.
IBM added that each payment is permanent once recorded, with settlement instructions provided through smart contracts on the company's Hyperledger Fabric platform. Initially, Stellar will provide the network and digital asset to facilitate settlements for cleared transactions.
To develop and deploy the blockchain process, IBM has gathered a diverse group of partners, including Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal Commercial Banking Corp Philippines, Sumitomo Mitsui Financial Group, TD Bank, and other institutions.
IBM expects to add more banks and process up to 60% of all cross-border payments in the South Pacific's retail foreign exchange corridors including Australia, New Zealand, Fiji, Samoa and Tonga by early 2018.