Real World Banking and Finance Case Studies with Enterprise Ethereum
Financial institutions around the globe recognize the transformative impact of blockchain technology
Blockchain has evolved from a good idea with strong roots to an oversaturated business buzzword to supporting live business use cases. Gartner’s Hype Cycle reveals an inflationary trend in reporting around emergent technology. The cycle is as follows: Innovative technology is introduced, global interest skyrockets and the technology hits the peak of inflated expectation where it becomes listless fodder for any desperate marketing teams looking to capitalize off of the current trend. The technology then hits the trough of disillusionment, climbs up the slope of enlightenment, and balances out on the plateau of productivity.
As a keyword, blockchain technology has been through the ups and downs, from the initial deserved excitement to being unwillingly sprinkled on the top of unrelated presentations as a way to draw eyes and increase profits. Now that the hype has died down, and the world turns to inflate, perpetuate, and strangle yet another term; real-world case studies involving distributed ledger technology shimmy up the slope of enlightenment and are approaching the plateau of productivity.
This article outlines four blockchain banking case studies in action.
Project i2i: driving financial inclusion in rural Philippines
70 million Filipinos do not have access to proper bank accounts. 56% of Filipinos reside in rural communities, a long way away from international financial institutions that carry out comprehensive financial services. The rural banks that support these citizens are often disconnected from electronic banking services and domestic money transfer networks in metropolitan city centers. Operating outside the banking industry is tough. It hampers upward mobility, long term opportunities, and reinforces the tight grip of poverty.
Unionbank and ConsenSys Solutions and Kaleido came together and created: Project i2i island to island | institution to institution | individual to individual
Project i2i uses an integrated blockchain-based solution to tackle the age-old problem of financial inclusion. Rural banks upgrade their manual accounting processes to modern infrastructure like a lightweight tablet to connect to the inter-bank consortium blockchain which enables transparency, efficiency, and speed of transactions between banks. Without becoming blockchain experts, 130 rural banks partnered with Projecti2i and will serve millions of previously unbanked Filipinos in 2019.
Goals Achieved
- The commercial launch of the i2i platform is scheduled for 2019, in partnership with 130 rural banks.
- Project i2i has received clearance and support from the central bank of the Philippines (Bangko Sentral ng Pilipinas) to operate as the country’s first Ethereum-based payment network for domestic funds transfers.
Next steps:
- Projecti2i stakeholders are working toward expanding the platform to include international funds transfer, using technology developed from another ConsenSys Solutions initiative, Project Ubin.
- The project plans to roll out an Ethereum-based international payment network in the near future.
For the Philippines — a country where overseas remittances make up to 10% of GDP — an Ethereum-based international payment network would make incredibly significant strides in increasing accessibility and efficiency, while also decreasing costs of cross-border remittances for millions of Filipinos.
Learn more about Project i2i: Blockchain Payments
komgo: bringing commodity trade finance into the 21st century
As it stands, rapid globalization has outpaced the financial industry’s ability to standardize and digitize its system of record-tracking. Currently, the exchange of commodities is managed by an outdated, inefficient, and cumbersome process that is prone to fraud and vulnerabilities. As the industry has many moving parts that are in many ways complex, it has proven to be difficult to innovate or push technological improvements globally.
To approach this complex problem with a blockchain-based solution, komgo was created to launch an open blockchain system to catalyze trade commodities.
Backed by a collection of the world’s largest commodity trade and finance institutions, komgo functions as a global network that eases trade finance for the international bulk goods markets. komgo utilizes Kaleido to build a platform that allows companies to issue digital letters of credit and more. Through digitizing the processes around commodities trade financing and easing the administrative burden of shifting oil, grain, and other commodities around the world, komgo reduces cost and complexity while decreasing the risk of failures and fraud. komgo intends to transform the global commodities trade and finance sector, starting their pilot project with energy.
Goals achieved:
- Streamlined operations are estimated to create potential cash-flow gains of 30–40% across the entire production chain
- Industry-wide adoption of komgo is expected to reduce the cost base between 20–50% with the possibility of further improvement as the project matures.
komgo is backed by 15 of the world’s largest commodity trade and finance companies: ABN-AMRO, BNP Paribas, Credit Agricole, Citi, Rabobank, SGS, Shell, Societe Generale, and many more.
Learn more about komgo: Blockchain in Commodity Trade Finance
Project Ubin: exploring the potential of distributed ledger technology in central banking
Standing at the forefront of banking innovation, the Monetary Authority of Singapore (MAS) sought to explore the role of central institutions in a world where cryptocurrencies and tokenization become mainstream. To answer this question, MAS launched a discovery project to examine how a tokenized Singaporean dollar could function as a means of daily inter-bank settlement.
MAS partnered with a number of financial institutions and enterprise blockchain technology companies, including ConsenSys Solutions and JP Morgan’s Quorum to create Project Ubin to test how a tokenized Singaporean dollar could function as a means of daily inter-bank settlement.
Results achieved:
- Project Ubin effectively reimagined institutional infrastructure in Singapore by implementing blockchain platforms.
- Successfully implemented real-time gross settlement (RTGS) systems with full transaction privacy and settlement finality while preventing single points of failure.
- MAS provided open-source access to the code and supporting information from the exercise. This information and shared codebase were used to build Project Khokha, another landmark banking and finance initiative.
Learn more about Project Ubin: Blockchain Banking in Singapore
Project Khokha: real-time gross settlement between financial institutions
For the banking industry, there is a high cost associated with providing the utmost reliability, availability, and resilience against attacks or equipment failure. Reconciliation payments continue to be inefficient, and the burden of reporting suspicious transactions falls on banks. How can central banks increase the resiliency of interbank payment systems while maintaining or even reducing the overall cost? Distributed ledger technology.
The South African Reserve Bank (SARB), in consortium with seven commercial banks, used Quorum, an enterprise-grade implementation of Ethereum, and the learnings from Project Ubin to create a blockchain-based interbank system that processed the typical daily volume of payments with full confidentiality and finality in record time.
Results achieved:
- A successful test revealed that blockchain was able to handle the daily volume of South Africa’s Real Time Gross Settlement System, which is approximately 70,000 transactions, in less than two hours.
- On average, transactions were processed within 2 seconds, with full confidentiality and a 100% settlement rate.
- 95% of block propagation time in less than 1 second and 99% propagation in less than 2 seconds. This demonstrated that acceptable performance is achievable, despite the geographical distribution of the banks’ hardware.
- The Central Bank Publication recognized project Khokha as the “Best Distributed Ledger Initiative” of 2018.”
Project Khokha lays the foundations for future distributed ledger banking projects.
Learn more about Project Khokha: Blockchain in Central Banking
These live case studies demonstrate that projects involving blockchain technology are reaching their rightful place in the plateau of productivity. Distributed ledger technology is indeed reshaping the banking and finance industry, not only by increasing ease and security of transactions but also by providing a simple, secure, and straightforward way to include the millions of unbanked citizens around the world.
Enterprise Ethereum is the foundation for many industry blockchain use cases and case studies. For more ConsenSys banking and finance case studies, check out Project i2i, Project Khokha, Project Ubin and komgo. Find out more about blockchain applications in supply chain, energy, government, healthcare, and sports.
Disclaimer. The views, information, and opinions expressed are solely those by the author above do not necessarily represent the views of Consensys AG. They are meant for informational purposes only, are not intended to serve as a recommendation or investment advice to buy or sell any securities, cryptoassets, or other financial products.
