By
Mayowa Adebajo
March 12th, 2024
IBM and Thailand’s Kbank launch blockchain-based Letter of Guarantee service to avoid paperwork, provide high rate transparency, and shorten a Letter of Guarantee process reducing the procedures down to only the click of a button.
Thailand’s Kasikorn Bank (KBank) joined efforts with International Business Machines Corp. (IBM) to launch a new enterprise Letter of Guarantee network based on IBM Blockchain. The new solution is targeted at simplifying and speeding up of procedures for KBank’s Letter of Guarantee process, in order to eventually improve the overall customer experience, enhance security and reduce costs for both clients and the bank.
KBank’s enterprise Letter of Guarantee solution avoids any paperwork due to digitized, streamlined and transparent process enabled by blockchain. In such a way, banks and customers can do everything which previously required paperwork with only the click of a button. In addition, blockchain provides high rate transparency, which help eliminate fabrications and improves service delivery efficiency. Another advantage of the solution is that it significantly shortens a Letter of Guarantee process, that previously could take up to several days.
“Blockchain technology is applied to create highly secure networks of document filing and retrieval,” said Pipit Aneaknithi, president of KBank. “As Thailand’s largest issuer of Letters of Guarantee, KBank is working with IBM to implement this innovative technology to further define and articulate our leadership in this market.”
“Blockchain reduces traditional transaction barriers and can help to improve business processes in the financial services sector and beyond,” – stated Parnsiree Amatayakul, managing director of IBM Thailand.
It’s well known, that IBM is committed to continuous strengthening of its transaction systems’ security. For context, last month it addressed the problem of data breach announcing new powerful transaction system called IBM Z that features revolutionary encryption engine able to encrypt data associated with any application, cloud service or database all the time.
Letters of Guarantee issued via the commercial banking system in Thailand are expected to constitute over $40 billion, increasing by 8 percent in 2017. Approximately $9 billion of that total will be issued by KBank, owing the largest share of the market making 25 percent. KBank is planning to increase Letter of Guarantee issuance via electronic channel to 35 percent by the 2018 year-end, 5 percent of which will be processed via the blockchain.
The solution is built to be able to meet an expected increase in Letters of Guarantee issuance through electronic channels and also to help deliver new business opportunities with other banks in the region by offering a single, shared data structure. For this purpose it is built on Hyperledger Fabric, a blockchain framework and one of the Hyperledger projects hosted by The Linux Foundation, and was tested in the Bank of Thailand’s regulatory sandbox.
KBank is one of Thailand’s largest banks which provides banking services including personal and commercial banking, international trade, and investment banking services to its customers throughout Thailand, Los Angeles, Hong Kong, Cayman Islands, Shenzhen, Shanghai, Beijing, and Kunming.
“As IBM continues to support KBank’s important initiatives in blockchain, the value this technology can bring to the bank and its clients is becoming increasingly clear, and can redefine the way businesses in the region operate and grow,” – added Parnsiree Amatayakul, managing director of IBM Thailand.
Meanwhile, IBM can boast of not only its attempt to digitize Letters of Guarantee issuance process in Thailand, but also of its partnership with Borsa Italiana, subsidiary of London Stock Exchange Group (LSEG), aimed at making it possible to digitally issue private shares of small and medium enterprises in Italy. In addition IBM partnered with a consortium of seven of Europe’s largest banks including Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit to develop a platform able to facilitate domestic and cross-border trade for small and medium enterprises in Europe.
At the same time, HP Enterprise, a separate entity spun out of HP last year, could make up ground it has lost to IBM and other competitors with ‘Mission Critical’ move into blockchain, which proof-of-concept was revealed last month.