Treasury Today Country Profiles in association with Citi

Bold moves on the blockchain

Black and white close up of chain

In both Europe and Asia, banks have announced deals with their corporate clients utilising the blockchain. Here, Treasury Today outlines these deals.

At the end of last year, French lender BNP Paribas announced that it had completed some of the first ‘live’ transactions on its newly created blockchain service “Cash Without Borders”.

The transactions were conducted between Italian sports collectibles firm Panini Group and Australian packaging firm Amcor. According to the press release issued by BNP Paribas, the transactions were “cleared in a few minutes” and used “different currencies to facilitate transactions between bank accounts located at branches in Germany, the Netherlands and the UK.”

The deal signals another milestone for the nascent technology and there are signs that the technology may soon have a significant impact on treasury departments around the world.

The corporate view

Speaking exclusively to Treasury Today, Fabrizio Masinelli, Group Treasurer at Panini said that the company had been keen to be involved in the transaction following initial discussions with BNP Paribas earlier in the year. “We have been following the development of blockchain closely and see a real benefit in being at the cutting edge of a service that can provide fast and secure payments,” he says.

The experience did not disappoint. “We did not have to make any internal changes to enable the transaction to occur on the blockchain,” he says. “All this work was done at the BNP Paribas end.” What is more, the test worked perfectly and was fast and secure. “It was great to watch the transaction happen in minutes, rather than have to wait a day or more.”

Having participated in this initial experiment, Masinelli is keen to do more. “I think that blockchain will be the future rails on which payments will take place,” he says. “There are many benefits that this can offer corporate treasury departments, including the ability to perform daily cash management and avoid wasting unnecessary time and money on complex payment processes, as can often be the case at present.”

Despite the success of this experiment, Masinelli issues caution. “We must not forget that blockchain remains in a test stage for the most part, but it is already proving that it works so I don’t expect it to be long before there is mass-adoption.”

Further progress

Treasurers will be interested to note that this is not the only successful blockchain test to take place recently.

For instance, India’s fifth largest private bank, YES Bank, has announced that it has developed a multi-node blockchain to digitise and automate vendor financing solutions for one of its clients, Indian electrical equipment manufacturer Bajaj Electricals.

Utilising Hyperledger technology and smart contacts developed by Catena Technologies and IBM, YES Bank has enabled Bajaj Electricals to digitise discounts and the disbursal of monies to the company’s suppliers in a more efficient and faster way. Debits will then be collected automatically upon completion of events that trigger the smart-contract.

In a press release, Shekhar Bajaj, Managing Director at Bajaj Electricals said: “This solution enables us to do timely processing of the vendor payment through vendor financing from the bank without physical documents and manual intervention. It also enables us and our vendor to track the status of the transaction on a real-time basis.”

What is next?

Announcements documenting successful blockchain pilots are becoming increasingly common. And this is arguably a good sign for the corporate community who may soon be able to benefit from the work being done.

It remains to be seen, however, how quickly banks will commercialise these solutions and how the broader blockchain ecosystem will develop.