The Infocomm Development Authority of Singapore (IDA), a statutory board of the Singaporean government, Standard Chartered Bank and DBS Bank, have developed a proof-of-concept for a blockchain-based invoice trading platform dedicated to banking institutions.
Built for Singapore, the platform is expected to start being commercialized in 2016, Gautam Jain, Standard Chartered’s managing director and global head of client access, told GTR. The three partners are hoping to see other banks joining in the effort as well as government agencies.
According to Shirish Wadivkar, head of payables, receivables and flow FX at Standard Chartered, the purpose is to “create an ecosystem in Singapore that improves its standing as a trade center and then take it global,” he told the Asset.
Khoong Hock Yun, assistant chief executive at the development group of IDA, said in a release that “it is essential for strong public-private sector partnerships to flourish to create a Smart Financial Centre with world class leading edge solutions that benefit our businesses.”
Announced in August 2014, Singapore’s Smart Nation initiative aims to turn the city-state into the world’s first hyper-connected country where the pervasive use of technology promises to bring improvement in the quality of life of people.
But a Smart Nation needs a Smart Financial Center, has argued Ravi Menon, the Monetary Authority of Singapore’s managing director.
According to Jacqueline Loh, deputy managing director for MAS’ FinTech and Innovation Group, the proof-of-concept illustrates “the innovative spirit of Singapore’s Smart Financial Centre to leverage distributed ledger technology to support economic trade – which is the lifeblood of Asia’s economy.”
The platform, which took six months to develop, uses Ripple’s distributed ledger tech to allow banks to convert invoices into digital assets, giving participants full transparency on the status of invoices seeking financing across all the participating banks.
The project seeks to be an “open ecosystem” where any third party can participate and verify the authenticity of the trade documents being financed.
“It was essential to choose an open-source, consensus-based protocol for our PoC. Ripple was as good as any; we continue to explore what would be the right protocol as this space is fast evolving,” Jain said.
The platform allows tracking invoices, backing loans to suppliers as well as reducing risk of invoice duplication. Jain said that the working team will soon start looking at other trade instruments.