CHALLENGE
The Reserve Bank Innovation Hub (RBIH) is a wholly-owned subsidiary of the Reserve Bank of India (RBI) established for technology innovation promotion across the Indian financial sector. RBIH consulted with leading public and private sector banks to identify key issues on adopting Distributed Ledger Technology (DLT) to improve existing banking processes and to enable a seamless banking experience for their customers.
To showcase capabilities of Interoperable DLT Platform the Proof-of-Concept (POC) was executed on Inland Letter of Credit as sample use case to demonstrate security & access control, robustness & maturity, performance & scalability of blockchain solution.
The aim was to streamline the process of issuing, amendment and agreeing a Letter of Credit between banks and their customers, and to ensure smooth and scalable banking services in a safe, transparent and efficient manner.
OUR SOLUTION
Billon, in partnership with FIS (worldwide leading banking software vendor), provided an authorized blockchain-based e-document platform powered by a TDM solution.
The solution allows banks and their customers to send, store and exchange documents and data to an immutable distributed register in real time.
The blockchain platform enabled transparent and highly secure sharing of documents and data between parties as an efficient solution, ready for mass scale adoption.
BEFORE
Traditional LC processes are labor intensive and time consuming based on manual verification and paper documents exchange. They are vulnerable to frauds and duplication. The are scattered on many factors and doesn’t take place in one system which affects the speed, safety and results of the whole process limited trust.
AFTER
Our solution provides a fast, highly secure and customer-friendly letter of credit process, which is fully processed on blockchain.
Encrypted digital LC and related documents are exchange between participants in real time in one tamper-proof system.
The exchanged documents cannot be deleted by design, and every information update is visible for the process participants, assuring high level of traceability.
The platform has been integrated with existing messaging solution, expanding its functionality and providing enormous level of trust.
HOW IT WORKS
FIS provided integration with core banking system and front-end applications for banks and corporates with UI for LC processing.
Billon provided DLT platform for documents and data management with implemented business logic.
STEP 1
Onboarding
Adding new entity to the system is managed by a Supervisory Node which grants permission to publish data and documents
Node per entity rule means that each participant of the system (e.g. Issuing Bank, Advising Bank Seller Company, Buyer Company) has a dedicated publishing node to which blockchain identity is established.
STEP 2
Applications Setup to connect to DLT
For each participant set of applications is established. Access and role management can be configured based on business logic. Integration with Core Banking system for Banks allows for LC issuance while further workflow and communication with other participants are conducted through LC UI web application.
STEP 3
LC Issuance
New LC is prepared in internal banking system by Issuing bank and can be directly published on DLT Once encrypted new LC is issued and published, Advising Bank is notified on that even and can preview and download the document directly from DLT through LC UI Panel. The process of publishing the document on DLT takes seconds so new LC can be received in almost real time. As the documents are secured and encrypted only Issuing bank and Advising ban can have the access to the document.
LC Interactions between Issuing, Advising Banks and Seller Company
Once LC is issued and published on DLT, the further process of determining the final version, acceptance, changes, exchanging messages, confirmations or sending additional documents related to the process of issuing the letter of credit takes place directly between the participants of the system. LC UI application is used to communicate the receipt and transmission of documents and messages and process management. Each participant is notified about new event and current status and can track and trace the process in real time.
RESULTS
BEFORE
AFTER
