Microsoft Corp. and Bank of America Merrill Lynch announced a collaboration on blockchain technology, during Sibos, an annual conference organized by SWIFT for the financial industry, in order to transform trade finance transaction.
The two companies as a part of the partnership, will build and examine technology, create frameworks, and establish best practices for blockchain-powered exchanges between businesses and its customers. The Microsoft Treasury experts will establish the first Microsoft Azure-powered blockchain transaction between a major corporate treasury and a financial institution by serving as advisors and initial test clients, the release stated.
“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. 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,” Amy Hood, executive vice president and chief financial officer at Microsoft said.
The underlying trade finance processes are presently manual, time-consuming and expensive. The process can be digitized and automated by using blockchain. Blockchain can shorten the transaction settlement time and create a host of benefits for businesses and financial institutions. It also enables more predictable working capital, reduced counterparty risk, improved operational efficiency among other benefits.
“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,” Ather Williams, head of Global Transaction Services at Bank of America Merrill Lynch said.
Both the companies will demonstrate the technology at Sibos in Geneva, Switzerland. The development and testing of the initial application is presently under process. The teams will work on initial development and testing and will focus to elevate and refine the technology application in order to include more complex use cases and additional financial instruments.
