IBM launches new blockchain-based cross-border payment solution

IBM‘s intention is to improve efficiency and reduce transaction costs for both the business and consumer sectors. For the first time, public blockchain technology is used for the management of cross-border payments, ie those types of transactions that involve the purchase or sale of financial instruments traded in different markets.

These are payments that traditionally involve numerous intermediaries who begin, close and finalize transactions between different currencies. IBM’s blockchain can handle payments between parties that operate in different currencies in a secure environment. Banking and financial institutions are part of the project with the aim of making the solution as widely adopted as possible.

Big Blue is working with KlickEx Group, a regional financial services company that manages over 60 percent of foreign-currency transactions in the Pacific and in Europe. IBM is also working with Stellar.org, a non-profit corporation that supports an open-source blockchain-based financial services network.

Transactions involving different currencies, in addition to calling into question various intermediaries, can be costly and laborious, as well as subject to errors. Based on growing lists of records that refer to previous records in the list itself, the new solution from IBM not only promises to speed up the process but above all to resist any kind of tampering. Furthermore, it complements a Settlement and Compensation system, or the settlement of transactions involving financial instruments entered into on different markets.

According to IBM, regulation of this aspect could have a very strong impact on the markets. Citing the World Bank, he argues that initiatives to modernize payments and access to financial resources could help achieve the goal of extending financial services to one billion people by 2020.

The blockchain-based IBM system allows, according to Big Blue’s promises, to reduce the validation times of operations from days to seconds. Other financial institutions include the Bank Danamon Indonesia, Bank Madiri, Bank Negra Indonesia, Bank Permata, Bank Rakyat Indonesia, Mizuho Financial Group, National Australia Bank, TD Bank and Wizdraw (HK) of WorldCom Finance. The system currently supports transactions between 12 currencies, but in the future it will also cover digital currencies issued by central banks, securities, bonds and structured financial assets.

The blockchain also allows you to record the terms of a hypothetical contract between two parties, to manage the commercial documentation, the possible issuance of credit instruments, credit cards and immediate transactions, in an easy and safe environment. It is one of the many applications of the blockchain that we are trying to bring forward at this time propitious for technology.

More details on the IBM blockchain can be found here.