Business technology major IBM has introduced a new Blockchain payments solution to speed global transactions.
IBM’s new blockchain banking solution will assist financial institutions to address the processes of universal cross-border payments, designed to reduce the settlement time and lower the cost of completing global payments for businesses and consumers.
The IBM solution will improve the speed in which banks both clear and settle payment transactions on a single network in near real time.
According to the World Bank, initiatives to modernize payments and provide financial access could improve the flow of currency and commerce, and achieve the goal of extending financial services to one billion people by 2020.
The IBM solution is processing live transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand and the United Kingdom.
Using a blockchain distributed ledger, all parties have access and insight into clearing and settlement of financial transactions. It is designed to augment financial flows worldwide, for all payment types and values, and allows financial institutions to choose the settlement network of their choice for the exchange of central bank-issued digital assets.
In the future, the new IBM network could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia. The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalize transaction terms with immediate payment, conducting global trade with transparency and relative ease.
“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,” said Bridget van Kralingen, senior vice president of IBM Industry Platforms.
Rizwan Khalfan, chief digital and payments officer of TD Bank, said: “We’re focused on innovation that adds value for our customers and our business, and blockchain presents a tremendous opportunity to transform and enhance payment systems, enabling us to continue to evolve the products and services we can offer.”
The network is currently in use by APFII members, a public-private partnership initially funded by the United Nations and SWIFT. It is expected to process up to 60 percent of all cross-border payments in the South Pacific’s retail foreign exchange corridors including Australia, New Zealand, Fiji, Samoa and Tonga by early next year.
Commercial banks will be invited to join the network and help it expand in different parts of the world beginning in 2018.