India completes its first banking blockchain transaction

By Meghna Rao for TechInAsia

ICICI Bank, one of India’s largest private banks, announced today that it has successfully completed blockchain transactions, making it the first Indian bank to do so.

The first transaction was to confirm that shredded steel melting scrap had successfully been imported to an export-import firm in Mumbai from a supplier in Dubai. The second was a money remittance from an ICICI Mumbai bank to a branch of Emirates NBD, one of Dubai’s largest banks.

ICICI Bank’s blockchain was custom-made with technology from Infosys-owned EdgeVerve Systems.

“Going forward, we also intend to work on expanding the blockchain ecosystem and create common working standards to contribute to the commercial adoption of this initiative,” ICICI Bank’s CEO Chanda Kochhar said in a statement, insinuating that there will be more to come.

Huge potential

Blockchain technology creates “blocks” of transaction records that are fast, secure, and easy to access. Every time a block is completed, it moves into the blockchain. The blockchain then has a chronological ledger of all completed transactions.

Its most popular use is with digital currency bitcoin. Every time a bitcoin is transferred, a new block of data is added to the blockchain. Everyone using bitcoin has access to that blockchain data, which means it’s difficult to cheat the system by re-using money or creating fake currency.

The banking world finds it exciting for a few reasons.

It takes banks a lot of time to move money. Blockchain technology is fast, which frees up the movement of money, instead of leaving it clogged in slow bank arteries. It’s more secure – no blockchain technology has ever been successfully hacked. It also makes tracking transactions easy. Banks otherwise spend a lot of money and time on tracking, particularly with bonds and stocks.

For customers, it presents the opportunity of reducing remittance costs. In 2015, India was the world’s most popular destination for remittances, with people sending around US$69 billion into the country.

“I envision that the emerging technology of blockchain will play a significant role in banking in the coming years by making complex bilateral and multi-lateral banking transactions seamless, quick and more secure,” Chanda said in the statement.

Last month, Bank of America and Microsoft partnered to create a blockchain system to transact between the two companies. According to IBM, 15 percent of big banks across the world will be using blockchain tech by 2017.

First appeared at TIA