Cross-border payments are in dire need of a technological revamp. Even though this concept has been around for decades, the way funds are transferred around the world remains virtually unchanged. Blockchain technology can play a big part in faster, more convenient, and cheaper transfers of value across borders. OCBC Bank, an Asian financial institution, has transferred funds over a blockchain between its different subsidiaries.
OCBC Claims Asia’s First Blockchain Funds Transfer
Whenever a company claims they have completed the “first of its kind” transaction over a blockchain, one has to take the information with a grain of salt. A lot of blockchain development is taking place behind the scenes, and funds have been transferred over distributed ledger in nearly every part of the world. That doesn’t make new pilot projects less exciting, though, by any means.
OCBC Bank, a well-known financial institution in Asia, successfully trialled blockchain technology for a cross-border funds transfer. The exchange of value occurred between two of the bank’s subsidiaries located in Malaysia and Singapore. With distributed ledger technology, transfers can be completed in near real-time and at a fraction of the normal cost.
This particular pilot program was made possible through a collaboration with BCS Information Systems. It appears that this company is the blockchain service provider for OCBC Bank during this trial, albeit that has not been officially confirmed at this stage. Nor do we know which blockchain was used, or what technology it is based on.
OCBC Bank SVP Group Operations & Technology Praveen Raina stated:
“We hope this will be a catalyst for more banks to adopt the blockchain technology so that, together, we can achieve efficiency and cost effectiveness while delivering more high-value financial services to our consumers.”
Several other banks and financial institutions around the world are working on their own blockchain prototypes right now. Through initiatives such as the Hyperledger Project and the R3 consortium, distributed ledgers are becoming the hot commodity in the financial sector.
One critical issue remains, though, as it is still unclear how all of these proprietary blockchains are supposed to communicate with one another. If every bank had its own distributed ledger that differs from its competitors, exchanging information could become a hassle. New industry standards will have to be created to alleviate these concerns moving forward.
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