South African Banks Trial Blockchain Solutions

Blockchain technology proponents are staking claims in Africa, paying special attention to banks. Six African banking institutions are making sure financial tech doesn’t disrupt their businesses by working together to connect their systems with distributed ledgers.

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Absa & Barclays Africa Testing Multiple Platforms Across the South African Region

One of the leading banks promoting blockchain technology is Absa, a partner with Barclays Africa. Absa has also joined up with the R3 CEV consortium and is one of the first African banks to do so. Absa and the other banks collaborating in the South African region are trying to develop a blockchain-based banking solution to create a more efficient and less costly financial system.

Andrew Baker, CIO for Corporate and Investment Banking at Barclays Africa, said of the announcement:

“We see huge potential for financial institutions in Africa to embrace disruptive technologies like blockchain, and use them to empower individuals and improve the lives of their customers. However, its true value will only be realized if we work together to co-develop and share solutions to common problems,”

Absa has also been focused on a private version of the Ethereum blockchain and is experimenting with smart contract technology. The working group created by these institutions are addressing financial services, intellectual property, and platforms that empower banking customers.

Baker says Barclays Africa has been experimenting with distributed ledger technology for a while now and has launched its Rise open innovation platform with its R&D experimentation.

Baker also notes that the firm has co-hosted the Blockchain and Bitcoin Africa Conference this past February and the company has about ten prototypes being researched.

Between testing a private Ethereum blockchain network and joining R3 CEV, the working group believes banks can benefit from systems that rely on distributed ledgers as opposed to traditional databases used today.

Baker is positive about R3’s development stating, “R3 has made significant breakthroughs to test how blockchain can be adopted by financial institutions.” With all the R&D going into these platforms Baker knows the industry is still quite young, and it will take time for these projects to take hold in the financial sector.

The Barclays CIO explains:

“Blockchain is still maturing and has yet to gain the trust of financial institutions and consumers alike. But if and when it happens, widespread adoption will happen quickly. Change is currently focused on disruptive innovation but will become more mainstream as industry alliances such as R3 and regulatory acceptance grows.”

Cryptocurrency solutions and blockchain technology are slowly making their way into the public eye with firms such as MPesa and BitPesa leading the charge in the continent.

Vinny Lingham, a South African serial entrepreneur and founder of blockchain startup, Civic, believes Africa will be disrupted faster than any continent on the planet.

Lingham is a strong supporter of the Bitcoin blockchain and feels that a trustless method will remove the need for traditional banks.

Lingham explains this past February, “I think the banking sector in Africa is going to be disrupted faster than anywhere else in the world. What you have with bitcoin and blockchain is a trustless method of operating. You don’t need third parties like banks operating as trust brokers anymore. It’s all built into the code. The way mobile leapfrogged fixed lines communications in Africa, blockchain will leapfrog a lot of the financial infrastructure that exists today.”

With this disruptive technology scaring banks from losing their grips firms like Barclays Africa want to encompass these innovations with the reputations of trust they believe legacy institutions provide.

With this disruptive technology scaring banks from losing their grips firms like Barclays Africa want to encompass these innovations with the reputations of trust they believe legacy institutions provide.

What do you think about African banks collaborating together to build a distributed ledger system? Let us know in the comments below.

Images courtesy of Pixabay, Absa, and Barclays Africa.