India’s Syndicate Bank to Expedite ATM Reconciliation Using Blockchain Technology
One of India’s oldest lenders–Syndicate Bank–will leverage its private blockchain network to simplify and shorten the ATM (Automated Teller Machine) reconciliation process. It is a move that could prove instrumental in bringing DLT into the mainstream in the country.
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Turning ATMs Into Blocks
According to local media outlet the Times of India, the Manipal-headquartered Syndicate Bank is developing a blockchain-powered ATM network to accelerate the validation of transactions to almost real-time, while concurrently expediting the procedures for ATM reconciliation.
For instance, in the case of an ATM malfunction while dispensing cash, a customer has to raise a complaint to the bank of the failed transaction. Following the complaint, the bank will implement a series of cumbersome manual workarounds, whereby a bank executive will physically collect data from the cash machine and then reconcile it with the failed transaction data. The process is slow and the customer has to wait for about a week to receive their funds.
Under the new private blockchain model, the ATM will act as a block within the network, hence, ensuring that transactions at the cash dispenser are reconciled every 24 hours. In the blockchain system, in the event of an ATM malfunction, the customer will receive an instant notification of a refund, with the transaction reversed within two days.
Syndicate Bank’s managing director Mrutyunjay Mahapatra said that by using the blockchain-powered system “the amount will be credited back to the account within 2 working days”.
However, for now, the bank has not revealed any technical information on how it will incorporate ATMs into its distributed ledger infrastructure.
The Banking Sector’s Blockchain Fever
While Syndicate Bank is the first Indian lender to use blockchain technology for ATM reconciliation, other payment processors and banks globally have mulled over the idea in the past.
Only weeks ago, the United States’ second biggest lender, the Bank of America, filed a patent for blockchain-powered ATMs that would speed up transactions and improve the general operation of cash handling devices. Apart from that, the patent application also stated that it will use blockchain technology for real-time reconciliation when settling transactions between financial institutions.
In the past, payment card giant China UnionPay, the only interbank network that connects ATMs of all the banks in China, filed a patent to develop a blockchain-powered network of automated teller machines.
Apart from using blockchain technology with ATMs, a number of Indian banks have worked to introduce the technology into various banking operations. Last year, seven private Indian banks partnered with India’s biggest software service exporter Infosys to develop a blockchain-based trade finance network.
Also, the country’s third-largest private sector lender Axis Bank, Kotak Mahindra Bank, and IndusInd Bank are all looking at RippleNet to speed up and reduce the costs of cross-border payments.
Can blockchain technology revolutionize the banking industry? Share your views in the comments section below.
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