BankChain, a 37-member group of banks in India, is holding a Blockathon every Thursday to help the members understand blockchain technology. The events are being organized for the past one month, with a specific distributed ledger in focus every week. The group helps different banks share each other’s DLT resources and collaborate on the same. It currently has ten live projects focused on corporate KYC and employee background verification.
A Blockathon a Week Keeps Issues Away
Each blockathon event is focused on solving one key problem banks face using distributed ledgers. The June 14 event focuses on using DLT for reducing stressed and non-performing assets. This session is a continuation of last week’s challenge. Banks learn how to explore, build, and implement blockchain based solutions in real-world problems.
The country’s central bank, Reserve Bank of India, has a very positive outlook on blockchain technology. In November 2017, one of its subsidiaries, Institute for Development and Research in Banking Technology, released a white paper while allows banks to create a “private blockchain for their internal purposes.” The paper pointed out that this technology could remove paperwork and financial messaging between banks and improve cross-border remittances.
Bankchain Alliance Leads the Way
Formed in February 2017, the 37-member body has representatives from 28 public and private sector Indian banks, including the likes of State Bank of India, Kotak Mahindra Bank, HDFC Bank and ICICI Bank. For an annual membership fee of Rs. 6 lakhs ($24,000 for foreign banks), the institutions get access to all source codes and nodes of the alliance’s projects.
Sudin Baraokar, the chief mentor of the alliance, revealed that all members get trained in the use of this technology, and the learnings can be implemented in a private test blockchain. The former head of innovation at State Bank of India, the largest bank, he was instrumental in rolling out blockchain based KYC and smart contract solutions to the customers.
BankChain has also helped different financial entities solve customer verification issues through a corporate e-KYC platform. Since its inception, they have also worked on a vendor voting system, pledges, and mortgages on movable and immovable assets and a DLT-powered register. Members can also share their private distributed ledgers.
Real-world Use-cases for the Projects
Primechain Technologies, the Pune-based startup behind the alliance notes that it could solve several issues for banks, especially while lending. If a corporate customer approaches a bank, that bank will verify his details. However, if he also approaches the second bank, he will have to perform the same verification process again.
Rohas Nagpal, the chief blockchain architect at Primechain explains,
“This bank could simply purchase those loan documents instantly from the first bank if the papers are part of a blockchain. By providing the same set of loan documents to other banks on a shared permissioned blockchain, banks could also make money from each transaction.”
They currently have ten live projects for employee background verification, bank guarantees, corporate KYC, charge registry and cross-border remittances. All the projects are being operated on a ‘permissioned’ blockchain framework, inspired by Ripple. The data can only be viewed by institutions that are whitelisted by issuer banks, ensuring confidentiality of user records.