The DBS Bank of Singapore has partnered with the multinational banking firm, Standard Chartered in order to create a distributed ledger project for trade finance which will speed up the transactions, lower the costs and boost transparency of international trade.
Bloomberg has published an article which states that both the firms have finalized its initial testing for the idea and they are planning to work with other firms on the initiative in 2016.
The article read, “In pursuing the technology that underpins crypto currencies, including bitcoin, Standard Chartered and DBS are developing a new approach that could transform the trade finance business by speeding up banking transactions, while cutting costs and boosting transparency.”
On July 2015, the chief innovation officer Anju Patwardhan announced that Standard Chartered is interested in this use case for technology. She believes that the true innovation behind the bitcoin is its decentralized public ledger, the blockchain.
She stated, “The banking industry is starting to see the many potential benefits of its underlying technology. For banks, the blockchain has the potential to become a technology model for a low- cost and transparent transaction infrastructure.”
According to Patwardhan, the public, yet pseudonymous nature of transactions on the bitcoin blockchain could help make financial institutions more transparent while combating against money laundering and other fiscal crimes.
Shirish Wadivkar, the head of payables, receivables and flow FX at Standard Chartered Bank stated, “If I have an ability to check if this invoice is genuine and not submitted somewhere else, and not financed by some other bank, and yet preserve the commercial confidence of the relationship, that’s the kind of problem we’re trying to solve.”
The proof of concept uses the Ripple technology that is based on the Ripple Labs. The technology differs from blockchain in the mechanism of reaching the consensus on the status ledger, which underlies the trust in the integrity of the data of ledger.
Wadivkar further states, “We want more banks to join us. Next step is to make it wider… bring parties who are neutral to the process, like customs or shipping companies.
The goal is to create an ecosystem in Singapore that improves its standing as a trade centre and then take it global.”
Last year, Mikkel Larsen, the managing director at DBS stated that there were important unresolved bitcoin issues in legal status and accounting.
The regulators of Singapore has offered clarity much sooner than the others. This would help to make the digital currency a viable currency while encouraging innovation with blockchain technologies.