SBI, Axis, ICICI Along With 8 Banks Join Forces To Use Blockchain For Preventing Banking Frauds
India’s largest bank: SBI is right now spearheading a massive partnership with other commercial banks to use blockchain technology as a medium to fight banking related frauds.
Aiding them in this exercise are technology companies like IBM, Microsoft along with financial institution KPMG. Axis Bank, ICICI Bank along with 8 other commercial banks are also part of this consortium.
M Mahapatra, deputy managing director, SBI said, “Being the largest bank, SBI has taken the lead in initiating blockchain, and we are in talks with banks and other companies for this,“
Usage of blockchain technology to fight fraud, especially by SBI and other banks is positively surprising, as few weeks ago, RBI had issued a notification warning all Indians against using Bitcoins, which is based on blockchain technology.
Note here, that China is already working on a new virtual currency platform based on the technology behind Bitcoins, which will soon replace their physical currency system.
These developments clearly point to the fact that blockchain technology is the force to reckon with in the coming years, as digital seep into our lives even more.
How Will Blockchain Help SBI To Prevent Frauds?
Bad loans form almost a fifth of all loans given out by banks, and it is a major component for increasing their losses.
Using blockchain technology, SBI along with other commercial banks aims to form a common database of defaulters and loan applicants, which can immensely help to stop future frauds.
Finance and Trade documents, which are handled physically as of now, would be now uploaded into a common platform, which can be accessed by all the participating banks. These would be digitally signed for extra security.
For instance, there are cases when trade merchants approach to several banks with the same invoice to avail extra discounts and further loans. Thus, getting multiple loans using the same invoice would be a thing of past with blockchain enabled fraud detection system.
Teamwork Is Crucial For Making It Work
As one official put it, just like NEFT system for transferring money, blockchain based fraud checking won’t work if only one bank is participating in the exercise. Hence, SBI is making efforts to take along other commercial banks as well and make them part of the consortium.
This is the reason ICICI Bank, Axis Bank, and Federal Bank, which have been experimenting with their own version of blockchain enabled fraud detection system has agreed to team up with SBI for this initiative. Talks are on with other banks including HDFC, Kotak Mahindra and Yes Bank and soon other public sector banks will join the forum.
IBM, Microsoft, KPMG, Skylark and technology company Prime Chain Technologies have already joined forces with SBI for the same.
Usage of a new and growing technology like blockchain for improving banking operations seems an exciting case study for the implementation of a true digital strategy which creates a common platform for all.
We will keep you updated as more details come in..