It seems blockchain has reached the small Middle Eastern country of Qatar, as one company within it explores potential use cases. Specifically, Commercial Bank, the country’s largest and first private bank, has completed a blockchain-based pilot program to improve international money transfers.
Qatar Bank Trials Blockchain Technology
According to the bank’s press release, they successfully completed an initial pilot phase to process international transfers in partnership with its regional alliance banks ABank in Turkey, National Bank of Oman, and United Arab Bank in the UAE, in addition to other banks in Egypt and India.
The blockchain network was able to improve international money transfers through increased automation.
Additionally, it increased transactional security, accuracy and speed, while eliminating the need for intermediaries. This enabled Commercial Bank to offer its customers near real-time bank-to-bank transfers at a relatively low cost.
Following further testing of the technology, the bank plans to expand their new product elsewhere — outside the borders of Qatar and into countries with “high remittance corridors”. The bank particularly wants to extend their network to countries such as Philippines, Nepal, Egypt, Pakistan and the United Arab Emirates to form closed networks for cash.
They also have a second phase of the project already planned, focusing on trade finance applications and extending the blockchain technology beyond payments to include legal and trade documents.
“All trade finance transactions will be paperless on the blockchain network, simplifying the process of exchanging purchase orders and invoices by eliminating lengthy international paper trails and verification through trade intermediaries.”
Pioneers of the Financial Services Industry
By introducing blockchain tech to the process of international fund transfers, the CEO of Commercial Bank thinks they are helping to pioneer change in the financial services industry.
“Blockchain has huge potential to change the financial services sector and we are proud to be the pioneers in leading this change in Qatar by introducing yet another new technology to provide the best client experience for all our customers.”
Whether this ends up being the case remains to be seen. However, it is true that blockchain technology has received a lot of attention from big players in the industry.
Indeed, global financial services companies such as UBS and BNY Mellon have even started poaching each other’s employees in an attempt to find experts in the field to lead their research teams.
Additionally, BNY Mellon has been an early blockchain experimenter and is now working with tech giant IBM on a project aimed at using distributed ledgers for securities lending. UBS has also tried its hand at blockchain research, leading a team of four of the world’s biggest banks in developing a blockchain settlement system.
Interestingly, with all of this happening, it’s important to note that all of these projects are either still being researched or in a developmental stage. In fact, UBS’ head of innovation, Veronica Lange, recently told a panel at the Innovate Finance Global Summit that blockchain for finance is still “a decade away.”
This makes Commercial Bank’s announcement that much more interesting, as they attempt to prove claims like this wrong. The fact that the bank has already rolled out a successful trial-run of the tech may have given them an edge over everyone else in the industry.
What do you think of the bank’s pilot program? What does the proliferation of the blockchain mean for the future of banking? Let’s hear your thoughts.
Images courtesy of Commercial Bank. UBS. and Doha.co