How Banks Start Using Blockchain in Communications

Banks and large-scale commercial companies including Daimler, the parent company of Mercedes-Benz, are starting to replace fax machines and the traditional method of communicating with one another using Blockchain.

Since 2015, banks and major technology companies such as Microsoft have been investigating the potential of Blockchain technology as a data processing platform. While sustaining the security measures of public Blockchain networks including Bitcoin, the Blockchain-based platforms can process large amounts of data, opening doors for a wider range of applications such as data verification.

On June 28, Daimler, the $68 bln parent company behind prominent car manufacturer Mercedes-Benz, successfully launched a one-year corporate loan settlement system utilizing a Blockchain-based system with Landesbank Baden-Württemberg (LBBW), to demonstrate the potential of Blockchain technology in the field of financial transaction settlement and data processing.

“This pilot shows our competence at digitization of financial services for our corporate customers. Technical progress opens completely new ways to make financial processes simpler and more efficient and enables new business models. We want to exploit this potential in order to further improve banking services for our customers,” said Rainer Neske, Chairman of the Board of Managing Directors of LBBW.

Fax machines inefficient

Sources revealed that previously, banks and companies including LBBW and Daimler were required to communicate with investors, initiate payments and engage in fax communication in order to complete deals manually.

In fact, many companies and organizations within the healthcare and insurance industries still rely on fax machines to transmit data. For instance, most major South Korean university hospitals have fax machines which customers can use to file their medical bills to their insurance service providers. Although some systems have become automated, most services remain inefficient.

Companies outside of the realm of finance are also actively investing the potential of using Blockchain technology to optimize the insurance and healthcare industries. One major issue has been selecting a Blockchain platform that possesses both security and flexibility.

Security and flexibility

Two Blockchain networks which banks and companies are currently using to automate systems and settle data are the Ethereum and Bitcoin networks. Although both networks are currently struggling to scale proportionally, companies have built flexible applications and peripheral financial networks on top of both networks to bypass the scaling issues.

Most recently, Tierion, a company that has been collaborating with Microsoft since 2016, released the Tierion network that utilizes the Bitcoin Blockchain to secure and process data. The network has already been tested by multi-billion dollar conglomerates including Microsoft and Philips, and Microsoft has joined the Tierion network as a core part of the network infrastructure.

Trust

Previously, companies like Tierion provided software as a service to large-scale companies, leveraging the Bitcoin network. However, as the industry matured, companies such as Tierion started to introduce their unique and independent global distributed networks to better serve large-scale companies that are in need of processing large amounts of data.

Tierion co-founder and CEO wrote:

“We see a fundamental problem with the Internet’s trust infrastructure. The root of trust for all systems relies on trusted authorities. Tierion Network makes it possible to create a better Internet where proof replaces trust as the foundation for security.”

Companies within the Enterprise Ethereum Alliance are also trying to create a decentralized ecosystem and platforms with which organizations can communicate each other without the necessity of intermediaries and manual labor.


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