State Bank of India, the largest bank in the country, has decided to revamp the backend technology on a big scale. Sudin Baraokar, head of innovation at SBI stated that the bank is planning to launch blockchain enabled technology in beta phases and the use of blockchain would include verifying KYC (know-your-customer) and preparing smart contracts. Baraokar also added that 27 banks have come together to form BankChain to explore various banking initiatives which could be made more efficient, faster and secure using blockchain.
Adding further to his statement, Sudin Baraokar said that 27 banks have come together and there are more banks expected to join the initiative. He said that two production solutions will be ready to use by next month. The first is smart contracts and the second includes KYC.
The bankchain initiative was formed in February this year. State Bank of India was its first member and currently, it has 21 Indian banks and 5 banks from the middle east companies. The Indian banks in the bankchain community include that of ICICI Bank, Axis Bank, and DCB Bank. Primechain Technologies, a Pune based startup is behind enabling these solutions for the banks on the bankchain community list.
In a recent media interaction at Tech Summit in Bengaluru, Sudin Baraokar had talked about the significance of having a community like BankChain and importance of implementing BlockChain in the banking sector. According to him, “A community helps the banks come together and invest at once in exploring how technology can ease the banking system. Also, a centralized technology platform will help the banks reduce the cost of technical R&D. Banks will also be able to share knowledge and work on a single technology system, which will enhance the speed and collaboration opportunities among them. Banks can also make use of the technology teams of each other to implement the system faster than ever. Also, the technology will help banks venture into the verticals, which were not possible earlier, for example, smart contracts.
What are smart contracts?
Smart contracts are contracts between two or more parties, which are enabled by the use of blockchain. Blockchain can be termed as a distributed, decentralized and secure ledger. The code and contract terms are available publicly, so that, there is no need for a regulatory agency to keep a track of the financial history of any party. These contracts are traceable ad irreversible.
State Bank of India is also setting up an innovation center in Navi Mumbai. This center will explore the possibilities of implementing next-gen technologies, including Artificial Intelligence (AI), Machine Learning, Blockchain, Robotic Process Automation (RPA), in the banking system and to explore on how these technologies can help easing the banking process. The innovation center is expected to partner with a number of startups and banks, who could be of help in the initiative. SBI has allocated a dedicated innovation fund for the center and it is expected to start operating by mid of next year.
Off late, banks around the world have been keen on exploring the use of technology to ease the banking process. The processes include payments, KYC, international remittance, loan approval and disbursal and virtual currencies.