In the growing trend of a wider adoption of blockchain technology around the globe, Indian IT giant Infosys Ltd. (ADR) (INFY) is developing a blockchain-based banking system to bring in new efficiencies and enhanced security in trade finance to the banking sector.
Blockchain-based ITC Project with 7 Banks
In partnership with seven Indian private banks, including ICICI Bank Ltd, Axis Bank Ltd, Kotak Mahindra Bank Ltd, Yes Bank Ltd, IndusInd Bank Ltd, RBL Bank Ltd and South Indian Bank Ltd., the Indian IT company has developed a trade network called India Trade Connect (ITC).
Essentially, it will bring all involved parties as participants on the blockchain network allowing for seamless and trustworthy execution and processing of various banking transactions. That means the buyer, seller, their respective banks, and the regulator, will all be the part of the blockchain network and will transact in a transparent and secure manner. It is aimed at increasing the transparency and automation of the various banking operations, and for better management of risks in trade and supply chain financing.
The project will allow for digitization of the trade finance business processes, including validation, certification and payments fulfillment, on a trusted, distributed ledger network. It will cover all major banking functions, like letters of credit, account opening, bill collection, C2C/B2C transactions, and purchase order/ invoice financing. Keeping a long-term vision with room for high scalability, the network is being developed to remain “agnostic” to the underlying distributed ledger infrastructure. It means that ITC will have compatibility with a variety of blockchain systems like Hyperledger, Corda, Ethereum , or Bitcoin , that will help it avoid becoming obsolete and incompatible in future on technical grounds.
The network is presently being used on a pilot basis by the banks to address the trade finance process requirements. (See also, Russian Bank Completes Bond Blockchain Transaction.)
Infosys’ Finacle software, which is commonly used by major Indian banks for their regular banking operations, is reported to be in talks with many other national and international banks to join the ICT network.
Sanat Rao, chief business officer at Infosys Finacle, told CoinDesk, "Digitization of trade finance processes using distributed ledger technology offers immense potential to eliminate the friction, cut costs and increase revenue through new business products that are now viable using the modern technologies." (See also, HSBC Makes First Blockchain Trade Transaction.)