This article is written by one of our contributor Richard Kastelein.
Infosys Finacle, part of EdgeVerve Systems, a wholly owned subsidiary of Infosys has completed a global five week blockchain trial in partnership with R3.
Stephen Obasi, Group Head, Head Office Operations, Fidelity Bank, said:
“This is an audacious step by Infosys to simplify and revolutionize global trade finance practice using Blockchain technology. During the trial, processes which ordinarily would have taken days were concluded within hours by counterparties that are all connected in the ecosystem. The transparency, speed, trust and security offered by the platform makes the use case compelling for trade finance practitioners. Our expectation is that Infosys will further expand the trial to cover trade settlements and also bring other key stakeholders involved in trade including regulators, customs authority, shipping companies, forwarders, etc into the platform for end-to-end processing.”
Eighteen banking groups joined the test network of Finacle Trade Connect – a blockchain-based trade finance application, available on R3’s Corda platform. By creating a distributed, global business network of nodes running Finacle Trade Connect, the trial simulated real-world trade finance transactions. Finacle Trade Connect was launched in 2017 and is currently powering a trade network comprising of over 250 corporates.
David E. Rutter, CEO at R3, added:
“Infosys Finacle’s successful completion of this global blockchain trial is a clear demonstration of the efficiencies blockchain can bring to various financial markets, and trade finance is no exception to that. As the promise of the technology continues to gather pace through trails such as this one, we are moving closer to bringing blockchain to the fore as a viable option to transform financial markets – in trade finance and beyond.”
Sanat Rao, Chief Business Officer, Infosys Finacle, stated:
Over the last four years, Finacle has made significant investments in developing blockchain solutions in the areas of remittances, trade finance and identity management. With Finacle Trade Connect solution, our vision is to help banks dramatically reduce costs and improve customer experience by connecting banks, trade partners and corporates on a unified distributed network. The trial results demonstrate the value banks can unlock with our solution. With emerging technology like blockchain, collaboration and co-innovation is a key to achieve exponential benefits and we are committed to helping our clients in their pursuits of transforming trade finance with permissioned ecosystems.”
- The participants simulated both domestic and international trade processes by forming intra-country and inter-country groups. Gulf International Bank, a leading pan-GCC universal bank specializing in corporate and investment banking, also replicated intra group processes with its subsidiaries in KSA, Bahrain and UAE
- Participating banks conducted trade finance transactions across a multitude of products, namely open account, factoring, bank guarantees, invoice financing and letters of credit
- Over 400 transactions were conducted by the participants during the trial covering front-to-back office processes across – corporate customer-facing, middle office and back office capabilities
- In a feedback survey conducted among the participants, 83 percent of respondents said that the trial ‘Exceeded Expectations’ and 100 percent said they will recommend this pilot to their partners and peers in the industry
- 67 percent of respondents believe that by having transacting parties on a shared distributed ledger, they can cut down the processing time by over 30 percent. 11 percent believe the improvement could be over 50 percent
- In terms of operational costs, as many as 66 percent of participants believe that in the long run their organizations can reduce at least 20 percent of their trade finance operational costs by leveraging the trade network on blockchain.
- 44 percent of respondents said the impact on fraud prevention would be significant
- 67 percent of respondents believe that there will be ‘Transformational Impact’ on customer experience improvement if customers are on-boarded on a shared network with other trade parties
The participating banks include ABC Bank Ltd, AO Alfa-Bank, Axis Bank, Bank of Baroda, EBE Bank, Federal Bank, Fidelity Bank Plc, First Bank of Nigeria, First City Monument Bank Ltd, Gulf International Bank, Intesa Sanpaolo, Prime Bank, RBL Bank Ltd, Syndicate Bank and Standard Bank (South Africa).
Finacle is the industry-leading digital banking solution suite from EdgeVerve Systems, a wholly owned product subsidiary of Infosys. Finacle helps traditional and emerging financial institutions drive truly digital transformation to achieve frictionless customer experiences, larger ecosystem play, insights-driven interactions and ubiquitous automation. Today, banks in over 100 countries rely on Finacle to service more than a billion consumers and 1.3 billion accounts.
Finacle solutions address the core banking, omnichannel banking, payments, treasury, origination, liquidity management, Islamic banking, wealth management, analytics, artificial intelligence, and blockchain requirements of financial institutions to drive business excellence. An assessment of the top 1250 banks in the world reveals that institutions powered by the Finacle Core Banking solution, on average, enjoy 7.2% points lower cost-to-income ratio than others.