According to a report by finance-focused news outlet Quartz, Open Financial Technologies will launch its solution called the BankingStack in the United States-India corridor first. Financial institutions operating in the corridor can use the enterprise banking product to launch digital banking solutions in weeks.
The product is based on open-source blockchain technology and allows parties involved in transactions to keep track of every stage of any transaction. According to Anish Achuthan, co-founder and CEO of the startup, the solution brings immutability to cross-border payments.
“…when the payment is happening there is also a ledger that records where the payment is at every point in time. So, immutability is brought into the whole transaction, whereby no transaction is ever lost from the system,” Achuthan said.
Achuthan added that the company is looking to work with banks to “offer a suite of products for cross-border payments and trade finance” that will benefit millions of SMEs in India.
Open Financial Technologies is one of four firms that the RBI approved to deploy blockchain-based cross-border payments products as part of the second cohort of its Regulatory Sandbox program earlier this month. Others include Cashfree Payments India Private Limited, Fairex Solutions Private Limited, and Nearby Technologies Private Limited.
The project started in September 2021 with 27 applications from the 26 entities that have been thinned down through live testing of their products. The approval is also coming amidst a dollar crunch in India and is billed to help alleviate the stress on importers and exporters.
RBI exploring more blockchain technology deployment
Apart from the private sector partnership, RBI also has plans to make blockchain technology part of India’s Core Banking System. Last month, the central bank announced an initiative in which it is collaborating with major commercial banks to utilize blockchain technology in running a trade financing platform.
Under the project being headed by the RBI’s Bangalore-based Innovation Hub, banks can maintain blockchain-backed tamper-proof Letter of Credit (LC) records.
The Innovation Hub has held a workshop with the participating banks and has backing from U.S.-based companies, including IBM and Corba Technologies, as well as Belgium-based SettleMint.
This is in addition to the digital rupee central bank digital currency (CBDC) the RBI is working on and plans to unveil gradually from next year.
Watch: BSV Global Blockchain Convention presentation, BSV for Retail Payments, Remittances & Rewards