With India being one of the fastest growing economies in the world, the penetration of innovative technologies in the finance sector is inevitable. ICICI Bank, one of the largest private banks in the country, on Wednesday took a timid first step in that direction and emerged a winner on the other side.
ICICI Bank has announced that it has successfully executed transactions in international trade finance and remittance using blockchain technology — the expected future of finance sector. The banking firm has been able to achieve this feat with help and support from Dubai’s Emirates NBD.
To add to your knowledge, let’s first discuss the basics of blockchain technology and then dive deeper into the intricate details of ICICI Bank’s achievement. You can describe blockchain as an open, distributed database that maintains a continuously growing list of records called ‘blocks’ which are secured from tampering and revision. This database then acts as a public ledger for users and banks who are able to connect to the network and complete desired transactions.
The introduction of this technology will help simplify the process of international trade/transactions and make it an almost instant affair — a few minutes. Once blockchain is introduced and accepted on a wider scale, you would no longer require to keep track of an intricate paper trail. Elaborating on the same, the official statement reads,
ICICI Bank is the first bank in the country and among the first few globally to exchange and authenticate remittance transaction messages as well as original international trade documents related to purchase order, invoice, shipping & insurance, among others, electronically on blockchain in real time. The usage of blockchain technology simplifies the process and makes it almost instant—to only a few minutes. Typically, this process takes a few days.
ICICI Bank successfully executed these pilot transactions via its blackchain network with Emirates NBD on a custom-made blockchain application — co-developed by EdgeVerve Systems, a wholly owned subsidiary of Infosys. The true aim of the app is to replicate the paper-intensive international trade process as an electronic decentralised ledger which acts as a single source of informations for all participating entities.
The first trial process not only enabled the importer in Mumbai; ICICI Bank, Mumbai but also the exporter in Dubai and Emirates NBD, Dubai to view the data in real time. This pathway then allowed them to track documents, authenticate ownership of their assets digitally and execute a trade finance transaction through a series of encrypted and secure digital contracts.
This was the first initiative, which showcased import of shredded steel melting scrap by a Mumbai-based export-import firm from a Dubai-based supplier. The second initiative for showcasing a transaction via the blockchain app allowed ICICI Bank branch in Mumbai to remit funds to an Emirates NBD branch in Dubai in real time.
Commenting on the marvelous success of the blockchain transaction, Ms. Chanda Kochhar, MD & CEO, ICICI Bank said,
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 as a partner and have successfully executed cross-border open account trade finance and remittance transactions.
I envision that the emerging technology of blockchain will play a significant role in banking in the coming years by making complex bilateral and multi-lateral 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
This is the perfect display of how technology will continue to simplify the jagged contours of our daily life. We can soon see rightful applications of blockchain technology, which will further lay the needed groundwork for expansion of cryptocurrencies in the country.