IBM and Bank of Tokyo Start Blockchain Revolution in Banking, Aim for Complete Automation
Business embraces Blockchain big-way with IBM and Bank of Tokyo Mitsubishi UFJ implementing smart contracts, Singapore emerges as center of Blockchain development.
In what could potentially be one of the first deployment of smart contracts in the corporate sector, IBM comes together with Bank of Tokyo-Mitsubishi UFJ (BTMU) to examine the design, management and execution of contracts among business partners using Blockchain technologies. IBM and BTMU plan to automate business transactions using Blockchain tech developed on the open source Hyperledger project. With this and other projects, Singapore emerges as a world’s center for Blockchain development.
Blockchain in business now a reality
The announcement regarding the deployment of smart contracts was made on September 16, 2016. It is expected that BTMU will be able to use the technology to manage contracts within FY 2017, while IBM and BTMU will be able to deploy the technology to manage contracts between each other by the end of FY 2017.
We talked with Robert Morris, Vice President of Global Labs, IBM Research. He explains how it would all work:
“‘Smart contract’ is a technical term used in Blockchain which refers to application logic that are shared, distributed and executed on Blockchain. What this means is that all of the parties in the transaction could actually be put on a Blockchain where everything is visible and terms can be executed automatically. For example, a smart contract could state that when goods cross a specific point and customs authorities approve it, money flows back from the receiver’s bank to the sender’s bank immediately with no waiting involved. These contracts sit on the Blockchain, with participants only seeing and signing the part that pertains to their role.”
IBM has future plans for Blockchain
While the release of the news that IBM has plans to deploy Blockchain along with Bank of Tokyo-Mitsubishi is momentous and underscores the importance of Blockchain technology, IBM is all set to spread its Blockchain wings.
Robert Morris tells Cointelegraph of their future plans, “The London Stock Exchange Group and Japan Exchange Group are a few of the other clients we are working with. However, most of the clients we are working with at this time see Blockchain as a potential competitive advantage and prefer not to go public as yet.”
Benefits for IBM and Bank of Tokyo Mitsubishi
IBM sees advantageous prospects ahead for both parties. It would appear that using Blockchain, IBM would be able to serve its role as a supplier better. We were told that IBM’s approach builds in security, identity and privilege not only into the Blockchain network, but in the way contracts are executed. IBM and BTMU plan to monitor the delivery and usage of equipment with a sensor that will add extra information into the Blockchain. This will allow them to automate invoicing and payment processes between the two companies. As for BTMU, the bank's internal processes will be made simpler, more accessible and open.
Singapore emerges as a center for Blockchain development
We asked Robert Morris about what role Singapore has to play in the future development of IBM Blockchain projects and he was excited about the prospects for the region.
He says, “The Monetary Authority of Singapore is an excellent example of a leading central bank in the world which is encouraging experimentation with Blockchain and engaging industry participants such as the FinTechs (through festivals, hackathons, etc) to help them transform the industry and realize a smart finance infrastructure that benefits everyone in Singapore and the region.”
IBM has a center for Blockchain innovation in Singapore, which was the first of its kind in the world and focuses on research and innovation. They are working with MAS, EDB, PSA, IDA and other industry players to explore possibilities in finance and trade. As Robert Morris puts it, “We aim to help make Singapore a top destination for innovation in finance, trade, and commerce and establish it as a global center of deep competence, expertise and industry leadership in enterprise Blockchain and cognitive technologies.”