South Africa’s financial services sector has made a promising foray into blockchain technology adoption given that all major commercial banks recognise the disruptive potential of the technology and have initiated pilot projects for a variety of use-cases.
At the centre of the industry, the SA Reserve Bank recently released its Project Khokha report – detailing positive results from its trial aimed at settling high volumes of payments via the blockchain.
Blockchain is rapidly maturing in the local banking and finance industries. Over the past couple of years, massive investment has surged into this field. We’re at an inflection point, where we’ve moved past the initial hype, and banks are now starting to explore some practical ways to apply the technology to real-world needs.
Blockchain holds the potential for a truly game-changing impact in many key areas of finance. But, even more importantly, blockchain’s adoption in the banking sector could be the catalyst for broader use-cases of the technology in other industries as well. Banks are absolutely pivotal to achieving this exciting cross-industry convergence.
In the realm of trade finance, for instance, blockchain could fundamentally change the way that banks position themselves in these ecosystems – by providing a secure platform for all participants (rather than simply being a trusted intermediary and clearing house that connects buyers and sellers) – with the KOMGO open financing platform being one of the standout examples of this.
Contracts, assets and finances can be ‘tokenised’ so that every participant uses blockchain to in their roles within the value chain – sellers, dispatchers, warehousing companies, shipping and logistics firms, receiving parties, and buyers.
Everything from dispatch orders, to receipts, to the bill of landing can be woven into a number of blockchain smart contracts. The obligations of all parties will be agreed upfront, and once all of these steps have been fulfilled, payment will be automatically executed.
Another great example is found in the area of residential property loans. This is a notoriously lengthy process that can be dramatically simplified and accelerated with the smart application of blockchain technology.
Currently, buying and selling a home involves a number of stakeholders – the buyer, seller, property agents, the Deeds Office, credit bureaus, valuators, municipalities, body corporates, lawyers, and more.
With Blockchain, we will be able to create an immutable record of the property, allowing for ‘trustless’ engagements between the various parties. It would also optimise processes and reduce the need for paper-based documents. All of the verifications and legal considerations will be added to this master record, which cannot be tampered with by any individual party.