IBM and Bank of Tokyo-Mitsubishi UFJ Develop Blockchain-Powered Contract Management System
by Giulio Prisco for BitcoinMagazine
IBM announced that it has signed a contract with the Bank of Tokyo-Mitsubishi UFJ (BTMU) to apply blockchain technology to the design, management and execution of contracts among business partners. The first pilot projects will automate business transactions between the two companies.
The BTMU, a member of Mitsubishi UFJ Financial Group Inc. (MUFG), is Japan’s premier bank and has a worldwide presence.
The project is built on the Hyperledger fabric to use a blockchain for real-life contract management on IBM Cloud. The Hyperledger fabric is an open-source blockchain technology platform intended as a foundation for developing blockchain applications. Its modular architecture allows for plug-and-play components, such as smart contract, consensus and membership services.
IBM and BTMU have built a smart contract system prototype on a blockchain to improve the efficiency and accountability of service-level agreements in multi-party business interactions. Taking advantage of the Internet of Things (IoT), the two companies are exploring ways to monitor the delivery and usage of equipment, using a sensor that embeds information into the blockchain to automate invoicing and payment.
“Blockchain technology has the potential to change not only the financial world, but also other areas of the business world, leading to improved efficiency of the end-to-end business process,” said Motoi Mitsuishi, Deputy CEO of BTMU Asia & Oceania. “Today, we are embarking on a journey with IBM to exploit the potential of this new technology. We are very pleased with the outcome of the first blockchain proof of concept working with IBM Research and IBM Global Business Services, and we look forward to seeing these blockchain applications come to fruition.”
Both IBM and BTMU are developing high profile partnerships in Asia. Recently, Bitcoin Magazine reported that IBM is collaborating with Mizuho Financial Group to find out how payment settlements could be implemented near-instantaneously using the codebase developed by IBM for the Hyperledger project. The project will use a virtual currency pegged to the yen, developed by Mizuho.
BTMU, in partnership with Hitachi Ltd., is testing a system, based on blockchain technology, aimed at the digitization of cheques in Singapore. In a joint press release, the two companies announced that together they have developed a system in which distributed ledgers are used for issuing, transferring and collecting electronic cheques. In the current testing phase, BTMU issues and settles cheques and some of Hitachi Group’s companies in Singapore receive the electronic cheques and deposit the funds.
“IBM continues to invest billions of dollars into research on emerging technologies that hold transformative potential for our clients,” said IBM Senior VP Bridget van Kralingen. “Blockchain will reinvent complex multi-party and contract-based business models, especially in banking and financial services. This expands our expertise in helping clients identify the right projects and build out blockchain solutions to solve day-to-day business problems more effectively. We are delighted to be expanding the scope of our partnership with BTMU with this blockchain initiative.”
BTMU plans to begin using the new system to manage contracts within their business in fiscal year 2017. In addition, IBM and BTMU aim to manage agreements between the two companies using the system by the end of fiscal year 2017.
“The idea of using blockchain to manage contracts came out of our existing and ongoing business with BTMU,” Dr. Robert Morris, Vice President, Global Labs, IBM Research, told Bitcoin Magazine. “We saw it as a way to improve the way we work together. We’ve already learned that Blockchain can improve our inter-company operations, and help us to deliver better, higher quality and more responsive services.”
“Blockchain pulls together known techniques in distributed systems, cryptography, and transaction and data management in a new and elegant way,” continued Morris. “It solves today’s problems efficiently and reliably. Because of that, it has opened a window to redesign processes to simplify them and provide better services.”
First appeared at Bitcoinmagazine