When JP Morgan’s CIO, Lori Beer said that blockchain will replace existing tech, she did not claim that out of thin air. The shift of companies around the world towards blockchain-based technology is starkly evident. This just in, the multi national banking firm, Standard Chartered and the manufacturing giant, Siemens are two big names in the corporate world that have jumped on the blockchain bandwagon.
Standard Chartered is partnering up with Siemens financial services, which is the financing arm of Siemens, to kick-off what they claim is an industry-first client pilot to create an end-to-end blockchain-based smart guarantees proposition in trade finance.
While digitalization is revolutionizing whole industries, incorporating digital trade finance solution into our daily operations is an important step.
Said Michael Bueker, Chief Financial Officer, Siemens.
They will carry out this project in alliance with the fintech firm TradeIX, which is a digital trade provider through an open-source blockchain platform. It basically allows financial institutions to develop their own trade finance applications with open APIs.
In assistance with Trade IX tools, Standard Chartered and Siemens initiated this project earlier in May. The project aims to transform the traditional and cumbersome paper intensive bank guarantees business. According to claims it is apparently to be the first ever blockchain client pilot that will completely digitize the process of bank guarantee issuance by using automated smart contracts.
According to Motasim Iqbal, Head Transaction Banking at Standard Chartered UAE,
This is an industry-defining solution, which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.
The project is built on R3’s Corda Farmework, and if the pilot results in success, it will give Siemens with an opportunity to digitize and automate its guarantee process, which proves to be quite inconvenient as well as inefficient while dealing with customers, particularly with large transaction volumes.
Corda itself is an open-source blockchain platform, is the right mix of business imperatives and kit-form blockchain application, thus allowing the users to transact with one another via smart contacts.
This blockchain-based initiative will digitally transform the entire process, right from the initiation of the bank guarantee to the claim handling. It will thus eliminate several touch points that contribute to the inefficiency of the paper-based process.
Bueker further explained,
Especially at Siemens, as a digitalization pioneer, this move is part of our strategic mission of going digital in all arenas. This will streamline our processes and make our trade finance operations smoother, faster and more efficient. We are delighted to partner with Standard Chartered in leading such game-changing transformation that will help our customers go digital in their guarantee and claim processes and achieve higher efficiency.
Standard Chartered & blockchain
While Standard Chartered’s involvement in the blockchain project is news, it doesn’t come as much of a shock, considering the fact that they have been evaluating the potential of the blockchain tech since 2015. When Anju Patwardhan, Chief Innovation Officer of Standard Chartered, shared that bitcoin blockchain has the power to reduce the costs of credit cards, money transfers and remittances.
The banking industry is starting to see the many potential benefits of its underlying technology. For banks, the blockchain has the potential to become a technology model for a low-cost and transparent transaction infrastructure.
She wrote in her LinkedIn post.
Also in the December of 2015, Standered Chartered partnered with Singapore’s DBS Bank in order to create a distributed ledger platform for trade finance.
In pursuing the technology that underpins cryptocurrencies, including bitcoin, Standard Chartered and DBS are developing a new approach that could transform the trade finance business by speeding up banking transactions, while cutting costs and boosting transparency.
Standard Chartered’s recent endeavor with Siemens is expected to be completed later in 2018.