Mumbai-based Yes Bank, India's fifth largest private sector bank, has completed a number of blockchain implementations involving the IBM Hyperledger fabric to support vendor financing for its client Bajaj Electricals.
The bank has collaborated with fintech start-up Cateina Technologies to automate transactions on a distributed ledger. Yes Bank is also using IBM Watson Conversation, a cloud-based cognitive service, to enhance the digital experience of partners, corporate clients and developers collaborating with them on the integrated blockchain/API banking platform, said a statement.
The digital vendor financing system alows Bajaj Electricals (anchor client) to digitise the process for discounting and disbursal of funds to its vendors by integrating seamlessly with Yes Bank, and facilitating an automated debit from Bajaj Electricals' account by the bank. Business logic is captured and executed on a blockchain; applications which automate workflows and run on top of blockchains are often referred to as smart contracts.
Yes Bank said the entire process cycle for bill discounting reduces from four days (owing to manual intervention and transit) to almost real-time; transparency to all parties becomes a given; and an end-to-end audit trail is created. The transaction status along with details are seamlessly transmitted to Bajaj Electricals' Enterprise Resource Planning.
Rana Kapoor, CEO of Yes Bank, said: "Since inception, Yes Bank has used technology and innovation, as mission critical pillars, to offer a superior banking experience to its corporate and retail customers. Our blockchain implementation is a continuation of this philosophy to offer revolutionary banking technology to our clients.
"We are glad that Bajaj Electricals is undertaking this technological leap and working with us to solve the current challenges in vendor financing solutions by effectively utilising blockchain capabilities.
"I strongly believe that we are only at the tip of the iceberg, and envision that blockchain – coupled with IBM's Cognitive solution on Cloud platform – will make a significant impact in the global transaction banking space by ensuring the financial supply chain is more robust, secure, seamlessly connected and provides a great customer experience."
Vanitha Narayanan, managing director, IBM India Pvt Ltd said: "IBM is pleased to work with Yes Bank as a valued client in the banking industry. With decades of industry leadership, we believe that cognitive systems that understand, reason and learn, in combination with blockchain networks and delivered on Cloud can transform operations, compliance and engagement, delivering truly individualised and secure client experiences. Yes Bank has been an early adopter of technology to transform employee and client experiences and we look forward to a continued partnership with them.''
The CMD of Bajaj Electricals, Shekhar Bajaj, said: "The blockchain solution by Yes Bank is a significant step towards digitally integrated solution for supply chain financing. This solution enables us to do timely processing of the vendor payment through vendor financing from the bank without physical documents and manual intervention. It also enables us and our vendor to track the status of the transactions on real time basis."
Yes Bank was the first in India to launch API banking services, in collaboration with IBM in 2015. The bank said its blockchain roadmap in India is exploring trade finance and digitalised letter of credit, documentary collections, foreign remittances and a partnering programme with correspondent banks.