The National Bank of Canada has teamed up with IT business services firm CGI and blockchain company Skuchain to deliver a pilot program aimed at improving financial transactions.
The pilot program will trial a blockchain guarantee and standby negotiation platform, which is designed to streamline the process for negotiating standby letters of credit and guarantees – the conditional agreements used by banks for securing financial transactions.
Currently, conditional agreements are conducted via email, which opens up the possibility for errors and delays, a process that the National Bank of Canada says also lacks transparency for beneficiaries regarding terms and approval status.
CGI has integrated its CGITrade360 trade finance platform with Skuchain’s Contract Builder, an application built on its Brackets platform for smart contracts on a blockchain, for the National Bank of Canada.
The integrated system will enable the National Bank of Canada to provide trade finance services digitally, which it hopes will give customers the ability to initiate, conduct and conclude negotiations of standby letters of credit and guarantees entirely on smart contracts.
The smart contracts construct agreements and securely communicate any changes in terms to relevant parties.
The National Bank of Canada says this blockchain-enabled system has the potential to improve processing times, reduce risks and help strengthen the bank’s customer relationships.
“This pilot project is a great opportunity to leverage blockchain technology to simplify the process for negotiating standby letters of credit and guarantees while making it more transparent and secure,” National Bank of Canada’s Payments division Vice President Patrice Roy said.
“This will enable us to offer a simple, fast and efficient experience to our commercial clients, which facilitates managing their business.”