IBM announced a partnership with the Japan-based Bank of Tokyo-Mitsubishi UFJ to use the distributed ledger technology for the execution of contracts among business partners.

The US-based multinational technology company IBM has entered into agreement with the Bank of Tokyo-Mitsubishi UFJ (BTMU) to use a blockchain-based platform for the management of smart contracts between entities. The companies are planning to automate business transactions using the technology built on the open source Hyperledger Project.

“Blockchain technology has the potential to change not only the financial world, but also other areas of the business world, leading to improved efficiency of the end-to-end business process,” said Motoi Mitsuishi, deputy CEO of BTMU Asia & Oceania and general manager of Singapore Branch and Corporate Banking Division for Asia & Oceania.

“Today, we are embarking on a journey with IBM to exploit the potential of this new technology. We are very pleased with the outcome of the first blockchain proof of concept working with IBM Research and IBM Global Business Services and we look forward to seeing these blockchain applications come to fruition.”

IBM and BTMU will build on a prototype of smart contracts on a blockchain to enhance efficiency and accountability of service level contracts in multi-party business transactions. BTMU projects to start using the technology to manage agreements in fiscal year 2017. Additionally, the two companies plan to manage smart contracts between each other by the end of fiscal year 2017.

The partners are also exploring the delivery and usage of equipment with a sensor that will be used to embed information into the blockchain, what will then help to automate invoicing and payment processes.

IBM Plans for Blockchain

According to Bridget van Kralingen, senior vice president of IBM Industry Platforms, IBM continues to investigate emerging technologies, investing billions of dollars into research activities. “Blockchain will reinvent complex multi-party and contract-based business models, especially in banking and financial services,” she said.

“This expands our expertise in helping clients identify the right projects and build out blockchain solutions to solve day-to-day business problems more effectively. We are delighted to be expanding the scope of our partnership with BTMU with this blockchain initiative.”

In July, IBM announced the opening of the Blockchain Innovation Center in Singapore in partnership with the Singapore Economic Development Board and the Monetary Authority of Singapore. With the project, IBM aims at driving the blockchain adoption within the finance and trade sectors. Meantime, the government of Singapore is committed to become a global center of expertise and industry leadership in financial technologies.

BTMU is not IBM’s first partner in Japan, as earlier this year the company teamed up with the largest Asian stock exchange, Japan Exchange Group, to design blockchain applications. In June, it also partnered with Mizuho Financial Group to test the potential of the technology in the settlement of digital currency.

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