Barclays Africa links up with blockchain drive

24 July 2016 - 02:00 By DINEO TSAMELA

"Blockchain" is the new buzz word in financial services and Barclays Africa has teamed up with international banks to explore the use of this technology.

Last week, it became the first African bank to join R3, an international consortium of close to 50 financial companies developing blockchain usage in the financial system. Members include parent Barclays plc, Credit Suisse, Goldman Sachs and JPMorgan.The focus of R3 is to bring double-ledger blockchain solutions into financial markets. Double-ledger is when a transaction, for example, a money transfer, is recorded on a block and the funds are made immediately available to the recipient. It allows the exchange of value in a secure environment while recording digital transactions as they happen."There's enormous potential for banks to embrace these new and disruptive technologies," said Ashley Veasey, the chief information officer of Barclays Africa.story_article_left1With the R3 blockchain model, banks could have immediate access to encrypted transactions on a single database, eliminating the need for separately maintained databases across different organisations.This would require collaboration from all the financial institutions, said Veasey.But it is not just the financial services sector that is headed for a shake-up with the technology. Blockchain can be used in any environment where a database has several users who are transacting and updating information continuously.It can facilitate transactions such as payments, contracts and identity validation . Each transaction is linked to every other one and attempts to alter them can be easily detected.In a closed system that deals with confidential information, blockchain allows the updating or exchange of sensitive documents and leaves a trail that will show who updated the documents, where and when.Transactions in a blockchain cannot be altered or reversed. They can only be built upon.One of the nonfinance-related projects that Barclays Africa is working on in its Rise start-up programme is Ghana's BenBen.BenBen co-founder Daniel Bloch said the company was set up to make the process of land administration easier. Bloch and partner Emmanuel Noah realised that there was a need for a trusted land registry where transactions would be recorded before payments were processed.Due to the lack of trusted records, banks were unable to securely provide mortgages, leading to "trapped capital" where property owners could not use their land as collateral, said Bloch.story_article_right2Blockchain could also ensure consistency when it came to distributing land records across government departments, he said. A report by Accenture predicts that the next few years will be all about experimenting with the technology, which will be part of the mainstream by 2025.Lee Naik, MD of Accenture Digital, said blockchain technology would cut out a lot of unnecessary administrative work. It could also be useful for combating money laundering and enabling Fica registration for customers, both of which are particularly important in the banking sector."Blockchain is useful wherever there's a need for transparency and irrefutable legacy, and it can reduce both fraud and corruption," said Veasey.Blockchain technology could be of use in government operations.Ukraine was one of the first countries to announce its intention to employ blockchain technology for elections. Ukrainian finance minister Oleksandr Danyliuk said early this year that he also intended to use blockchain technology to sell off government assets "to make sure that there's no place for corruption"...

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