Wellknown US finance institution Bank of America and the multinational technology giant Microsoft have informed about their intent to build and test blockchain applications for trade finance.
According to the deal, Bank of America (BofA) will work directly with Microsoft Treasury department (this group will be responsible for managing transactions related to its corporate treasury activity together with strategic business investments and acquisitions), to establish a blockchain system that can facilitate transactions between the companies.
Microsoft executive vice president and CFO Amy Hood indicated in the official statements that the major motivation for such move is the need of treasury risk reduction.
According to Hood:
“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 companies stated that now they are only in the phase of platform testing to see how it can facilitate the letter of credit process and that a demo version of the technology will be unveiled at the Sibos banking conference in Geneva during this week. Such announcements come after many other major financial institutions started to monitor and even use the blockchain technology for better facilitation of trade finance together with supply chain processes, with a recent major test taking place at banking consortium R3.
Such extensive interactions require multiple parties and many of them still use spreadsheet and paper-based processes, so the use case has long been seen as a fertile area for applications of the emerging technology.
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