Blockchain-Based Financial Networks are Maturing and Seeing Real Benefits, Spanning across Domestic Remittance, Cross Border Payments, and Trade Finance Use Cases
Thousands of financial services contingents gathered at SIBOS 2019 in London to learn and share insights on enhancing digital ecosystems and leveraging new technologies to gain a competitive edge. As a leading provider of enterprise blockchain solutions, Kaleido took the stage with partners and customers to share how leaders in financial services have already moved past blockchain pilots to achieve real results in production.
Despite what some media may claim, blockchain technology has proved to be much more than just hype. Adoption has exponentially increased as organizations discover the practical uses of this technology and find the right go-to-market approach for their solution.
But the path from discovery to implementation is not always clear. Kaleido aims to shed light on how innovative companies are creating new business models with enterprise blockchain and experiencing remarkable results in a short amount of time - and hopefully, these examples will inspire you to explore blockchain for your own business goals.
One significant proof-point of blockchain’s viability for trade and finance is komgo, a blockchain-based commodity trade and finance network comprised of the world’s largest banks, oil majors, traders, and certification companies. komgo achieved a significant milestone this summer, executing a half a billion francs (nearly a billion USD) of commodity trade finance transactions related to shipments of crude oil from the North Sea.
komgo started with 15 core members including Citi, ING, Koch Supply & Trading, MUFG Bank, ABN Amro, Societe Generale, Credit Agricole Group, BNP Paribas, Shell and others.
"We are in full acceleration,” states Souleima Baddi, komgo CEO. “It's a unique adventure to be able to transform an industry that has changed little for centuries." komgo evolved trade finance from a risk-prone, paper-based system to a fully digitized and secure experience on the blockchain. By 2020, komgo anticipates serving 50 customers. You can find more information about komgo’s journey and the benefits they’ve experienced thus far in this case study or watch a replay of the Trade Finance on Blockchain - SIBOS panel here:
Project i2i, a blockchain-based payment network spearheaded by UnionBank and others to connect rural community banks in the Philippines, successfully grew its network from 6 participating banks in 2018 to 31 financial institutions with 153 branches and 252,800 accounts. It has facilitated over 575 transactions amounting to 79.2 Php million. The savings achieved on a single domestic remittance have been equivalent to a week’s worth of food for ‘unbanked’ families.
Project i2i’s network achieved Philippines central bank approval (Bangko Sentral ng Pilipinas) this spring and is on pace to have over 400 rural banks and over 2,500 branches in the region onboard by next year. Further building on the i2i platform this summer, UnionBank issued its own stablecoin, PHX, pegged to the Philipino peso and backed by UnionBank reserves. UnionBank used blockchain-based tokenized fiat to successfully remit from OCBC Bank in Singapore to an account holder at Cantilan Bank, a rural bank in Surigao Del Sur. Additional information on the use of blockchain and its impact Project i2i can be found in this case study.
To accelerate these financial services enterprise blockchain networks, Kaleido, in collaboration with ConsenSys and Amazon Web Services (AWS) and Microsoft’s Azure, offers the only production-ready, consortium-level cross-region hybrid deployment platform that caters to diverse needs on a global scale.
“As enterprise blockchain deployments mature, they depend on having an easy and cost-effective way to onboard new members and scale. Privacy and governance concerns are paramount for enterprise networks,” says Steve Cerveny, Founder and CEO of Kaleido.
As a solutions provider, Kaleido is continuously working to improve upon its mission to help support emerging blockchain use cases across sectors. Last week, Kaleido announced the inclusion of advanced cryptography to provide the extra levels of privacy that clients are requesting as their networks and use cases mature. Toon Leijtens, CTO of komgo, explains, “A challenge for blockchain networks is the protection of private information on the ledger. Zero-knowledge proofs offer a potential solution for this by allowing a party to verify the accuracy of a statement without conveying the actual information in the statement.”
Zero-knowledge proof is just one service available in Kaleido’s suite of capabilities to advance the maturity of blockchain networks.
As networks scale, they need mechanisms that allow for larger sets of blockchain validators. Kaleido added the Rotating Signers Service as a way to allow participation of more than 15 members.
Business consortiums also need the ability to govern the digital smart contracts where the business logic is executed; that’s why Kaleido is excited to release new smart contract management components that let users take control of who can deploy a contract, simplify contract auditing and provide consortia-level visibility of the smart contracts running on the network. Stay tuned for more information on the smart contract management capabilities, which will be available later this week.