While consolidating the city’s position as a vibrant
cosmopolitan regional hub — aiming for various green energy and sustainability
standards and generally modernizing the quality of life in this coastal
Persian Gulf region — Dubai planners are also looking to leverage new
technologies to better industry and commerce.
An Oct. 12 press release shows how the city’s largest
bank, Emirates NBD, is getting together with the ICICI Indian private sector
bank to start using blockchain technology for various global trade
transactions.
“I am delighted that we are the first bank in India and
among few globally to set up a blockchain application,” Chanda Kochhar, CEO and
managing director at ICICI, said in another press statement released Oct. 12. “We have also marked a milestone by piloting a blockchain network with
Emirates NBD as a partner and have successfully executed cross-border open account
trade finance and remittance transactions.”
As an electronic ledger system based on the digital currency
of bitcoin, blockchain provides “immutable records” of ledger data and helps
to track information securely, often without a need for third-party
verification.
Two American companies have already begun to template a
blockchain build for client development: Microsoft and Bank of America
Merrill Lynch are also experimenting with this state-of-the-art ledger system.
“By working with Bank of America Merrill Lynch on
cloud-based blockchain technology, we aim to increase efficiency and reduce
risk in our own treasury operations,” Amy Hood, executive vice president and chief financial officer at Microsoft, said in a September press
statement. “Businesses across the globe — including Microsoft
— are undergoing digital transformation to grow, compete and be more
agile, and we see significant potential for blockchain to drive this
transformation.”
Dubai’s bankers are taking a similar tack.
Reports of Dubai’s innovation show that officials expect new
blockchain adoptions to decrease transaction costs and quicken transaction
times, pushing invoice transfer and purchase orders toward real-time
implementation.
How is this done?
Rik Willard heads the Agentic Group, a tech company with an
interest in blockchain and related technological advancements.
“(Blockchain) takes away layers of complexity,” Willard told Gulf News Journal. “These layers can be scripted by code.”
Willard discussed the use of “smart contracts” that have
built-in functions for anti-money laundering and other important protocols that
have become so much a part of today’s financial world.
All of this, he said, helps make bank operations much more
efficient.
“It’s almost instantaneous clearance,” Willard said.
Referring to an ideal “one-step process” that would save the
banks money, Willard asked an important question: “Will the savings ever be utilized by consumers?”
Whether or not the banks intend to pass savings on, the new
uses of blockchain clearly constitute capable efforts to modernize systems that
have much to benefit from automation and business process enhancements possible
through the use of new, more evolved tools. As with other big projects
happening right now in the Emirates, the Dubai initiative on blockchain could
be a bellwether for other pending developments in the financial industry.
