The National Bank of Abu Dhabi (NBAD) is using blockchain-based technology to transmit cross-border payments, and said it is the first in the region to do so.
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Using a blockchain-based service from US IT firm Ripple, the UAE bank plans to make cross-border payments easier, faster and more secure for its customers across the Middle East.
According to the World Bank Annual Report 2016, the UAE was the fourth biggest remittance-sending country in the world, accounting for over $19bin (AED70bn) in transactions.
Ripple’s Distributed Financial Technology will be integrated with NBAD’s payments infrastructure to allow instant transfers of funds.
NBAD’s head of global transaction banking, Vineet Varma, said: “We’re always exploring new ways to enhance our customers’ experiences. With blockchain, we hope to address the needs of our customers and drive forward more efficient and flexible service.”
The National Bank of Abu Dhabi is the first bank in the region to provide customers with Ripple’s technology, joining a growing list of world companies, such as Santander, Standard Chartered and UniCredit.
Blockchain explained – in the words of co-founder Nic Carey
Blockchain is a peer-to-peer network that allows multiple parties to transfer value in a secure and transparent way.
The technology allows us to create a system in which: no one can corrupt, sabotage or control the system; trust between participants is not necessary because it is embedded in the system itself; access to all relevant information is available to participants; and activity in the system is held to account through transparency.
The record of transactions on a blockchain is immutable, which means once a transaction is added, it cannot be altered or deleted. Moreover, the blockchain is maintained and validated by everyone who uses it, thus eliminating the need to trust a single central administrator. These features guarantee the integrity of the system.
With a few thousand lines of code, users can download apps on their phones that allow them to effortlessly make transactions with anyone else, as easily as sending an email.
Also in the Middle East finance sector, Abu Dhabi Securities Exchange (ADX) is using blockchain to provide controlled access to the annual general meeting (AGM) documents of listed firms to mobile devices.
But it is not just the financial services sector that can benefit, with experts predicting that blockchain will have powerful implications for regional government institutions and could cut a swathe through Middle Eastern bureaucracy and speed up civic transactions and processes.
M R Raghu, senior vice-president of research at Markaz (Kuwait Financial Centre), recently told Computer Weekly that regional governments still rely on paperwork for key processes, which slows down tasks and increases bureaucracy.