Anup Purohit, Chief Information Officer, Yes Bank, in a quick chat with Amit Singh revealed the company’s aggressive initiatives on blockchain and the benefits it is witnessing with the technology implementation for supply chain financing
How is blockchain transforming the banking segment in India?
We strongly believe that blockchain will make a significant impact in the global banking space by ensuring the financial transactions are more robust, secure, seamlessly connected and provide enhanced customer experience. While systems, processes, and protocols are becoming more and more sophisticated, financial institutions still continue to face challenges with the cost efficiency of transactions and in securing their systems real-time to combat evolving threats.
On the other hand, blockchain consortiums are enabling banks to process payments/trade transactions more quickly and accurately while reducing transaction processing costs and the requirement for exceptions.
Attempts at creating blockchain consortiums within banks and other ecosystem players are in progress locally and space is ripe for moving from individual bank-led POCs into nationwide networks with wide participation from members and support/sponsorship from the regulator(s).
With blockchain and specifically its underlying ledger technology, it’s not a matter of ‘if,’ it is about ‘when.’
Please reveal your initiatives around blockchain inside your organization.
Yes Bank is the first bank in India to introduce a multi-node blockchain solution for supply chain financing. We were among a handful of banks around the world who were experimenting with this technology and recently also became one among very few companies around the world to commercialize a blockchain solution for financing.
It’s a quantum leap in customer service in the form of quicker TATs, secure & transparent transaction and immutable record creation, allowing the industry to test newer use cases and implement them for the betterment of processes and enhance overall customer experience.
We are also in talks with other corporate houses in the manufacturing and other sectors wherein this Vendor Financing solution will ease out their operations and provide real-time bill discounting solution. Considering that our infrastructure is already in place and the comfort of already having a solution live on blockchain gives us the confidence to build a lot more use cases on the technology either through the standalone or consortium-led model which will differentiate us from competitor banks that are still in the nascent stage of adopting blockchain.
We are also planning to be a part of industry consortiums (we are already a part of BankChain, now in the midst of initiatives to form other credible consortiums of scale in the country) and explore new use cases on blockchain for KYC, trade finance etc.
Differentiation will also be created through the plug and play of various digital solutions through a range of APIs available within the bank which is built on IBM’s platform similar to the blockchain.
In the remittance space as well, we are on course to commercialize remittance flows in specific corridors through public networks that use ILP (inter ledger protocol) and have the potential to also use DLT (distributed ledger technology) in future.
What are the benefits you are witnessing with the blockchain solution implementation?
Our blockchain implementation is a continuation of our philosophy to offer revolutionary banking technology to our clients. With the pilot transaction along with Bajaj Electricals, carried out in 2017, we were able to commercially launch blockchain for supply-chain financing and execute live transactions in the month of March 2018.
Below are the various benefits accrued by the client, their vendors and Yes Bank.
- The entire process cycle for bill discounting has the potential to reduce the turnaround time from four days (owing to manual intervention and transit) to near real-time
- Transparency to all parties through blockchain’s shared & immutable public ledger
- Completely digitized process eliminating paper trail & manual intervention
- The entire transaction history of a vendor is recorded and is immutable through blockchain with end-to-end audit trail available
- The transaction status along with details are seamlessly transmitted to Bajaj Electricals’ Enterprise Resource Planning via API
- Use of a permissioned blockchain with the flexibility to add other participants later
- Use of a superior crypto key to offering state-of-the-art security for both documents and transactions on the blockchain.