NAB trialling IBM blockchain technology

Ann Santiago
October 18, 2017

Merchants increasingly want to do business across borders, and payment companies need to work to enable transaction processes that reduce friction in the purchasing process. Services like TransferWire, American Express or Western Union Money Transfer are rather good for savvy customers, but not suitable for small businesses which can not afford the huge transaction costs.

IBM (IBM) announced Monday a new blockchain banking solution that will help financial institutions address the processes of universal cross-border payments.

IBM and Stellar both are working together on a project named Hyperledger Fabric under which they are developing open source blockchain tools to assist payment infrastructures. Blockchain databases provide appropriate parties with access and insight into the clearing and settlement of financial transactions; they could be said to simplify existing systems which involves a network of middle-men and cumbersome verification steps. By the early next year in the South Pacific's retail foreign exchange corridors, it will apparently process up to 60% of all cross-border payments.

A spokesman for IBM said: "With the guidance of some of the world's leading financial institutions, IBM is working to explore new ways to make payment networks more efficient, and transparent so that banking can happen in real-time, even in the most remote parts of the world". This payment solution can help in settlement of trades on a single network in real-time.

The company suggested the same system could be used to manage an arrangement between a farmer in Samoa and a buyer in Indonesia by recording the terms of the contract, managing trade documentation, allow the farmer to put up collateral, obtain letters of credit and finalise transaction terms with immediate payment, making it simpler for businesses of all sizes to trade across borders.

The payment solution from IBM is already effective and processing live transactions in 12 countries across the Pacific Islands, United Kingdom and Australia.

BlockChain that depends on a divergent network of computers for creating an indelible, transactions of tamper-proof record, is highly associated with the Bitcoin digital currency.

IBM has also partnered with Walmart, Kroger, Nestle and others to improve the food safety by using Blockchain technology which can help to enhance traceability and transparency.

Jesse Lund leads blockchain and distributed ledger market development for IBM (NYSE: IBM).

According to IBM, global banking leaders and financial institutions are participating in the network to expand its use.

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