Microsoft and Bank of America Merrill Lynch have announced a collaboration to transform trade finance transacting with blockchain technology.
The two companies will develop and test new technology and frameworks in an effort to establish industry best-practice for the establishment of blockchain powered exchanges between organisations, their customers and their banks. Microsoft has put forward a team of treasury experts that will act as advisors and guinea pig clients. Their aim is to establish the first Azure powered blockchain transaction between a major company and financial services 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, executive vice president and chief financial officer 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.”
With the current trade finance process being sluggish, manual and costly, blockchain is touted as a genuine alternative that could transform not only finance but a variety of other industries through automation, reduced risk, enhanced transparency and improved efficiency.
“The potential benefits of blockchain will help drive meaningful supply-chain efficiencies to the clients of both Microsoft and the bank. This project is another example of our continued commitment to introduce financial innovations for the betterment of global commerce,” said Ather Williams, head of Global Transaction Services at Bank of America Merrill Lynch.
“We are excited to be working with Microsoft on this groundbreaking blockchain proof of concept that has the potential to help redefine, digitise and improve how trade finance instruments are executed today,” said Percy Batliwalla, head of Global Trade and Supply Chain Finance at Bank of America Merrill Lynch.
Microsoft first debuted Azure Blockchain as a Service in November 2015. Given the global success of its Azure cloud platform (almost 10% market share), Microsoft has the capabilities, compliance certification and enterprise-grade security in place to tout itself as a trusted partner to the financial services industry. It currently boasts 80% of the world’s largest banks as customers and 75% of the most important financial services firms.
Development and testing of the initial application, built to optimise the standby letter of credit process, is currently in progress. The Microsoft and Bank of America Merrill Lynch teams will demonstrate the technology at Sibos in Geneva, Switzerland. Following the initial development and testing, the teams will work to refine the technology and evaluate applications to include more complex use cases and additional financial instruments.
We spoke to Microsoft’s Blockchain lead Marley Gray a few months ago. Listen to the podcast below:
More information on Microsoft Azure Blockchain as a Service can be found at www.microsoft.com/blockchain