India's largest bank will soon use blockchain to cut costs and improve efficiency and security in banking.
India's largest bank, the State Bank of India, will launch blockchain-enabled smart contract and identity verification beta projects in December, its head of innovation Sudin Baraokar told the Economic Times on Monday.
Blockchain has proven to be the larger value of cryptocurrencies, with implications for almost every industry. The public ledger technology uses digital signatures and cryptographic hashing to provide a record of secure transactions that cannot be altered.
The moves come from BankChain, a group of 27 banks from India and the Middle East which joined together in February to research and create blockchain solutions for the banking industry, with the help of Intel.
"By next month, we should have two beta production solutions ready for use by the 27 banks," Baraokar told the Times. "We will also invite further participation."
The smart contracts will use blockchain to maintain contracts between parties. The code and agreements are public, traceable, and irreversible, the Times noted, and therefore, will not require any enforcement agency.
"Smart contracts can be used for simple things like non-disclosure agreement... rather than signing forms. A lot of internal processes can be contracted," Baraokar told the Times. "We do a lot of IT procurement, a lot of it can be implemented using blockchain."
The blockchain-enabled Know Your Customer (KYC) will help banks verify a customer's identity, with document requests from the bank when opening a new account. This can reduce the human and financial costs of such verification.
State Bank of India is also currently designing an innovation center in Navi Mumbai, which will research emerging technologies such as artificial intelligence (AI), machine learning, robotic process automation, and predictive analytics, and their potential use for making banking easier. The center is expected to be completed by mid-2018, and will host hackathons, incubate startups, and bring in vendors to guide them, according to the Times.
The financial industry stands to gain a lot from the implementation of blockchain. Mastercard, American Express, and IBM all recently announced blockchain banking solutions to allow customers and financial institutions to more quickly and cost effectively process payments across international borders. Blockchain can also be used between enterprises and vendors for IT rollouts and other projects.
BankChain is currently working on projects including secure documents, peer-to-peer payments, syndication of loans, blockchain security controls, virtual currencies, and trade finance, according to its website.
The 3 big takeaways for TechRepublic readers
1. The State Bank of India will launch blockchain-enabled smart contract and identity verification beta projects in December.
2. The smart contracts will use blockchain to maintain traceable contracts between parties, while the identity verification measure will cut down on human and financial costs.
3. The bank is also creating an innovation center to explore how AI, machine learning, and other technologies can be used in the industry.
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