Blockchain-based finance solutions by Infosys

Cross-border trade and banking have been in place since the 70s. But even in today’s world, trade finance can be costly and time-consuming given its high volume. Is blockchain really a cure-all here? Time will tell. But, technology market research reports say that this is definitely one of the most interesting symbiosis to keep an eye on in 2018.

Infosys Finacle (India Trade Connect) that is a part of Infosys’ subsidiary Edge Verve systems has announced a pilot blockchain-based solution for India’s financial operations. The digital solution has gained quick popularity and there are 14 banks that have now associated themselves with Infosys to reap the benefits of it. The 14 banks hold responsibility for a majority of the country’s transactions and if or not they’re all within the purview of blockchain is yet to be tested.

How is blockchain predicted to help?

Blockchain, in simple terms, is a digital ledger with great possibilities. It is decentralized and can be used to record transactions across many computers in a categorized manner. Each record can be authenticated with a digital signature. Any alteration in even a single record requires the collusion of every party in the network. Here is how the bettered integrity and transparency can help:

·         Every entity (individuals and businesses) engaged in a specific supply-demand chain will maintain a direct relationship with each other over a virtual network. This eliminates the direct dependence on physical documents and everyone has a clear view of the trade instruments

·         Transparency is increased between the parties involved. This is done by the facilitation of real-time sharing of documents and messages. Quick decision-making is thus made possible

·         As a consequence of the above, every concerned person is aware of the status of flow in the chain at every instant unlike the traditional interactions through siloed channels

·         A higher level of automation involved guarantees a speeded-up process with more accuracy and efficiency. It also ensures a more effective risk mitigation.

·         With blockchain, every entry is linked to another entry. Every record is a consequence unlike traditional databases where entries made are snapshots of a moment in time. This reduces fraudulent practices to a large extent. Processes like auditing and accounting will have a profound impact.

Blockchain market research reports seem to predict a lush future for the technology. But like the application of any science, this technology has its own employability challenges.

Why can’t blockchain be deemed fool-proof?

Despite the reduction of paper-intensive processes for international remittances, the employment of blockchain doesn’t promise a never-failing solution for the banks now associated with Infosys. Although more rewarding than traditional methods in terms of speed, transparency, and security, the following are the setbacks measured so far:

·         Unregulated safety standards
With the traditional banking systems repellent to changes, there hasn’t been a lot of controls and protection systems in place to suit the digital era. Digital systems are prone to cybercrimes. One must ensure a due consideration of the vulnerabilities.

·         Technology doesn’t stay stagnant
It keeps evolving and the learning curve is significant. With the adoption of a technology like blockchain, the financial institutions involved are signing up for a dynamic network that requires persistence, responsiveness, and a long-term vision.

Market research reports say that to be proactive is the key. Blockchain, as a technology, has great potential. To tap this and to exploit it to your best can only be possible from a deep understanding of the two fields; finance and blockchain.