SINGAPORE - Cross-border payments, which typically take three to five days to clear, can now be processed within a few minutes using a new service being tried in a pilot programme.
Partior, a blockchain technology provider for payments clearing and settlement, was formed by Temasek and DBS and JP Morgan banks to test the initiative.
It managed to achieve end-to-end settlements in Singdollar and US dollar in under two minutes, all thanks to blockchain technology, which allows a network to move and validate information simultaneously.
Partior was conceived during Project Ubin, a collaborative project between the Monetary Authority of Singapore (MAS) and the financial industry to explore the use of blockchain and distributed ledger technology for clearing and settlement services.
Partior chief executive Jason Thompson told The Straits Times that the instantaneous exchange of information is akin to "a data handshake", which is very different from what is happening elsewhere.
Moving currencies between bank accounts in different countries can take anywhere from three to five business days as the transfer is typically processed by an intermediary and the fees can be costly.
With global cross-border transactions expected to reach US$156 trillion (S$210 trillion) next year, Mr Thompson said Partior is "aggressively seeking to disrupt the global payments industry" and to address the pain points that plague it like slow settlement speeds and costly transaction fees.
"Our next milestone will be to engage with a broader group of settlement banks and their participating bank ecosystem to increase our currency coverage. We are aiming to cover the top 15 currencies in the world and will be onboarding banks and currencies in a measured fashion," he added.
Mr Lim Soon Chong, group head of global transaction services at DBS, said at Partior's launch last week: "In the present, we have over US$100 trillion of global payments characterised by inefficient clearing and inefficient settlements."
That has generated demand for instantaneous payments, said Mr Lim.
The high efficiency and transparency of blockchain technology has triggered a wave of innovation across the banking sector.
Mr Praveen Raina, OCBC Bank's head of group operations and technology, said: "Blockchain and decentralised ledger technology have the potential to revolutionise elements of banking. We have implemented many blockchain solutions in the cross-border payments and trade finance space.
"But blockchain's use has extended even further in the last few years, with environmental, social, and governance applications becoming apparent."
Partior is also an official partner of the MAS' Global CBDC (central nank digital currency) Challenge.
MAS chief fintech officer Sopnendu Mohanty said: "Globally, there is strong interest among central banks in the use of CBDCs to streamline transaction processing and make financial systems more efficient, transparent and cost-effective.
"The Global CBDC challenge is an important milestone to explore... retail CBDC solutions in partnership with the international community."