Blockchain is poised to bring about a revolution that will make financial transactions as simple as sending a text. It has the potential of transforming existing financial systems and even replacing the institutions handling global payments and remittances through it attracting both industry insiders and regulatory bodies.
Today, billions of people have not been in the reach of essential financial services. Therefore, a situation when billions stay unserviced is beyond any catchphrase but has been recognized as a vital need for life. Interestingly enough, blockchain is coming to the rescue, reshaping our interactions with financial institutions and services meaningfully.
Let’s take a monthly round-up (Sept-Oct’23) on various developments in the intersection of blockchain technology and banking that were reported.
1. India’s CBDC Hits 1.5M Users
Reserve Bank of India (RBI) Governor Shaktikanta Das announced that India’s Central Bank Digital Currency (CBDC) now has around 1.5 million users. In addition to which, around 300,000 merchants are currently accepting payments in digital rupees. The Indian CBDC pilot project is being operated through 13 banks in 26 cities as it progresses.
The RBI is offering full interoperability of CBDC with UPI QR codes, targeting 1 million daily transactions by December this year.
2. JPMorgan’s Launches Blockchain-based Token for Faster Payments
JPMorgan Chase & Co. unveiled blockchain-based digital deposit tokens to expedite cross-border payments and settlements. These tokens are designed to streamline transactions and settlements at lower costs by leveraging blockchain technology. Easy fund transfers between clients of other banks, settling trades including tokenized securities and anti-fraud measures are a few other benefits of the blockchain-based token launch.
3. Central Bank-backed NPCI Begins Blockchain Recruitment
The National Payments Corporation of India (NPCI), a Reserve Bank of India (RBI) led initiative, is looking for blockchain technologists to lead and investigate blockchain-based payment systems. NPCI owns and operates the Unified Payments Interface (UPI) that facilitates interbank peer-to-peer and person-to-merchant transactions.
4. Indian Bank Partners with IBM
Indian Bank, in collaboration with IBM, is all set to deploy new banking applications while addressing the core banking solution (CBS) workloads for the bank. IBM will offer the technology to support the bank’s compliance audits, ensuring data protection. “we aim to achieve agility,
scalability and security to meet our growth requirements,” said Deepak Sarda, chief general manager – IT and partnership, Indian Bank.
5. Blockchain Applications
In general, applications of blockchain technology in the banking sector, including those in payment systems, document notarization, P2P payments, Trade Finance, and more, are evolving in the banking sectors. Various banks are exploring these applications to enhance various financial banking operations and other related services.
It's a Wrap Up
The potential of Blockchain technology is immense, with a lot of promise in the finance industry. This is particularly so since demonetization imposed enormous pressure on financial institutions, which had to depend on a single authority to clear their transactions. In order to address it, RBI has advised banks to adopt blockchain, one of the technologies that will improve speed, efficiency, and security against hacking, reducing time and expenses.
These updates reflect a growing interest and investment in blockchain technology within the banking sector, with financial institutions like J.P. Morgan leading some of the innovative projects. Moreover, the continuous venture funding and evolving applications indicate a positive trajectory for blockchain's role in transforming banking operations and services.
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