Are you aware that IBM, the technology giant, has been tirelessly struggling to become a world leader in promoting the use of Blockchain technology in
Are you aware that IBM, the technology giant, has been tirelessly struggling to become a world leader in promoting the use of Blockchain technology in the financial sector? Recently, it officially announced that it’s working on another major project.
The technology giant, in collaboration with the Mahindra Group, intends to develop a supply-chain finance system based on Blockchain technology. It’s important to take cognizance of the fact that Mahindra Group is one of the largest conglomerates in India.
The new system will make use of an authorized Blockchain to optimize supply-chain finance processes. Special emphasis will be placed on invoice discounting.
Generally, supply-chain financing is very difficult. Most of the transactions that usually occur among suppliers, financial institutions and buyers involve the use of paper invoices. These documents have to be sent back and forth, and information contained therein must be manually fed into their respective systems. All these enhance the risk of errors and also lengthen the processing time.
Blockchain technology efficiently and effectively alleviates the two aforementioned limitations. It works by creating an immutable and shared ledger that can be instantaneously updated by each party, while simultaneously preventing each participant’s access to sections of the contract that are related to them. These result in reduction of human errors and minimization of operation costs. Additionally, it promotes transparency and ensures that sensitive data remains protected.
For a very long time, IBM has been offering up-to-date products based on Blockchain. Its main focus has been on the development of real world apps for the exceptional technology in areas like trade finance as well as financial services.
For instance, Hyperledger Fabric has received several open source contributions from IBM. In April 2016, the technology giant (IBM) availed Blockchain services to the users of IBM Buemix Cloud to facilitate building and testing of solutions based on Blockchain.
The approach taken by IBM will give it a competitive edge over other consortiums/ groups that are currently working on the technology. The flexible structure will enable the company to easily focus and concentrate on special-use cases.
Blockchain, a technology that is renowned for powering crypto-currencies such as Bitcoin, is increasingly being used by financial institutions because of its special capacity to enhance efficiency and streamline processes. Santander estimates that by the year 2022, the technology would have reduced costs by approximately $ 20 billion. The explanation behind this is very simple. Since Blockchain works like a distributed ledger, it allows the transfer and storage of sensitive data in locations that are secure, easily accessible permanent as well as anonymous. Therefore, it can simplify logistically complex, paper heavy and expensive financial systems such as remittances, trading of securities, cross border transfers, exchanges of ownership and shareholder management.
Jaime Toplin, BI Intelligence’ research associate, has compiled a comprehensive report about Blockchain technology. The following are its highlights.
Highlights of the report
1. Aite Group estimates that the expenditure on capital markets use of Blockchain will increase at a CAGR (compound-annual growth-rate) of 52%. By the year 2019, the expenditure would have increased to $ 400 million.
2. The main financial institutions such as commercial banks are developing Blockchain technology by working autonomously and collaboratively. More than 50 leading financial institutions are associating with joint Blockchain startups, while many others are autonomously investing in it.
3. The possibility that Blockchain will soon be used in actual transactions is very high. If the ongoing tests produce good results, companies may start transacting real value using the technology in the next months.