Infosys collaborates with seven banks to create blockchain-based trade network
In light of high levels of fraud and a vast repository of non-performing assets, Infosys has established a collaborative network within the Indian banking sector, which will promote greater security and transparency. The network will operate on blockchain, and currently consists of seven major financial institutions.
Nirav Modi’s departure from the country with $2 billion of Punjab National Bank’s money earlier this year accentuated a fact that has been a major source of debate in recent times – India’s banking sector is in need of reforms. Modi and his associates conspired with bank officials to generate fraudulent credit guarantees, demonstrating a dire need for transparency of operations.
The woes of the banking sector extend beyond fraud, however, as India’s non-performing loan ratio currently stands at nearly 10%. Reports emerged last year that placed the total value of non-performing in assets in India at Rs.10 trillion, 25% of which were accounted for by only 12 companies.
Appeals for government reform have been growing in volume, while, for their part, banks in India have been seeking support from the consulting industry to dispel the immediate problem. A major part of this internal transformation has been the introduction of the latest digital tools into daily operations to enhance efficiency and, more importantly, security.
International management consultancy Boston Consulting Group (BCG), for instance has helped two separate banks for digital transformation, namely Karnataka Bank and the public sector IDBI Bank. Now, Infosys has rallied seven of the biggest financial institutions in India to create a blockchain-based collaborative trade network, which will operate on its brand new platform by the name of Finacle Trade Connect.
Under this new product, member-banks will be able to exchange data freely through the decentralised blockchain distributed ledger system, thereby ensuring transparency as well as significantly enhancing security via the lack of a core data storage system. The system also facilitates customer protection by promoting open interaction amongst account-holders as well.
The forum will be used for a portion of activities, which include billings, letters of credit, activation of new trade accounts, and a number of other functions. Infosys hopes to expand the network to incorporate several firms, and has thus far secured the membership of Axis Bank, ICICI, IndusInd, Kotak Mahindra, South Indian Bank, and Yes Bank.
A statement released by Infosys read: “The network is being used by the banks to run a successful pilot [named] Finacle Trade Connect, a blockchain technology-based solution developed specifically to address the trade finance process requirements of banks. Finacle Trade Connect will enable increased automation and transparency while helping efficiently manage risks in trade and supply chain financing operations… enabling everyone involved in a transaction to have a single source of the truth.
