Bank of America to collaborate with Microsoft on Blockchain to ‘transform’ financial transactions
The Microsoft Azure announcements keep coming after the Bank of America agreed to collaborate on blockchain technology to “fuel the transformation of trade finance transacting”.
The two organisations said they will “build and test technology, create frameworks, and establish best practices for blockchain-powered exchanges between businesses and their customers and banks”.
This is because a blockchain technology can be used to create a distributed database that can store complete transaction history of all types of records. Such a database is potentially of interest to businesses, as well as those organisations involved in banking and finance circles.
Microsoft launched its Azure Blockchain as a Service (BaaS) last November and since then has been steadily working to bring blockchain to both governments and enterprises. In June it announced Project Bletchley to try and help businesses adopt blockchain.
And now as part of the agreement with Bank of America, so called ‘treasury experts’ from Microsoft will act as advisers and initial test clients. They will establish “the first Microsoft Azure-powered blockchain transaction between a major corporate treasury and a financial institution”.
“By working with Bank of America Merrill Lynch on cloud-based blockchain technology, we aim to increase efficiency and reduce risk in our own treasury operations,” said Amy Hood, CFO at Microsoft. “Businesses across the globe – including Microsoft – are undergoing digital transformation to grow, compete and be more agile, and we see significant potential for blockchain to drive this transformation.”
The development is apt becasue at present, underlying trade finance processes are highly manual, time-consuming and costly. But the hope is that with blockchain processes can be digitised and automated, and transaction settlement times shortened.
Blockchain should also allow for business logic to be applied to related data, all of which creates a host of potential benefits for businesses and financial institutions. The touted benefits include more predictable working capital, reduced risk, improved efficiency, and enhanced audit transparency.
“The potential benefits of blockchain will help drive meaningful supply-chain efficiencies to the clients of both Microsoft and the bank,” said Ather Williams, head of Global Transaction Services at Bank of America Merrill Lynch.
Earlier this month, IT services giant Accenture courted controversy when it announced the creation a Blockchain editing tool, a development that potentially undermines the central philosophy of this technology.
However, Accenture said edits would only be carried out “under extraordinary circumstances to resolve human errors, accommodate legal and regulatory requirements, and address mischief and other issues, while preserving key cryptographic features”.
It feels that the tool is crucial if blockchain is to be accepted globally in finance circles.
Blockchain has already received a major show of support from the UK Government earlier this year after Cabinet Office Minister Matthew Hancock confirmed it was looking at how the technology could be used to manage and keep track of the distribution of public money, such as grants and student loans.
Last year, it was also reported that the NASDAQ stock exchange was evaluating blockchain in order to see if it could be used in trading of shares in private companies.
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