FIs continue experimentation with blockchain for business transactions

21 Oct 2016

  • Visa Introduces International B2B Payment Solution Built on Chain’s Blockchain Technology 

  • Previewing Visa B2B Connect, near real-time high-value international payments

  • CBA and Wells Fargo combine blockchain and IoT to revolutionise trade finance 

  • Physical IoT supply chain location trigger and distributed ledger for transactions

  • ANZ and Wells Fargo test distributed ledger tech for correspondent banking 

  • Distributed account record, shared and maintained by correspondent banks

 

Sources: Visa; Finextra

 

 

Point of View 

Visa is ‘previewing’ its new high value international payments solution based on blockchain technology from Chain, a start up based in San Francisco. Visa plans to pilot in 2017. The benefits are quoted to be predictability and transparency from real-time payments, and secure and trusted from the underlying cryptography.

 

In independent projects, Wells Fargo are working with two Australian banks experimenting with blockchain and distributed ledgers. While both projects are in the business to business space, they address different sectors – with CBA it’s trade finance, while with ANZ it’s correspondent banking.

 

The projects are exploring the technology and potential for a positive business case while acknowledging that elements of the propositions (such as legal and regulatory) may still need to be worked through. ANZ and Wells Fargo’s paper from the project is available online.

 

The common thread through the projects is the potential to improve international settlement, in the banks’ case reducing cost and risk, where traditional approaches are said to include duplication and third party costs. Understandably, as they are a third party processor, Visa do not talk about a reduction in costs but an improvement by offering clear costs and transparency.

 

Implications

For useable retail payments the volume and performance requirements in many payment scenarios represent too much a challenge for blockchain systems. It seems sensible that, as with these announcements, applications where trust, transparency and integrity are critical are likely to offer the best fit. These applications tend to focus on business to business relationships.

 

Financial service organisations continue to experience with blockchain technologies, and it will be interesting to see the winning business ideas that coalesce from experimentation, whether traction from a set of distributed stakeholders can be achieved and which interoperable solutions can develop scale.

 

The opinions and views expressed in this publication are those of the authors exclusively and do not purport to reflect the opinions, views or official policy position of AusPayNet or its members. This publication is also subject to the AusPayNet Terms of Use and Privacy Policy available on the AusPayNet website.

 

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The opinions and views expressed in this publication are those of the authors exclusively and do not purport to reflect the opinions, views or official policy position of AusPayNet or its members. This publication is also subject to the AusPayNet Terms of Use and Privacy Policy available on the AusPayNet website.

 

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