Many banks and financial institutions in India have been targets of phishing attacks. As per the reports, around 3,870 bank frauds worth Rs 17,750 crore have been reported in the last year. State Bank of India (SBI) holds the second spot with frauds worth Rs 2,236.81 crore. Many banks were experimenting with the technology of blockchain. Finally, it is SBI, the largest public sector bank in India, finding a lead in blockchain technology.
SBI are bringing lenders and IT companies together for using blockchain technology to share information among banks, which will eventually help prevent frauds and tackle bad loans that are almost one-fifth of banks’ loan. SBI will start integrating blockchain technology in products starting next month as part of a beta test. The bank will roll out blockchain-enabled ‘smart contracts’ from next month as a public beta. And soon, it will be followed by blockchain-enabled Know Your Customer (KYC).
Christened as Bankchain, the SBI’s initiative is in partnership with top tech players like IBM, Microsoft, Skylark, KPMG and 10 commercial banks. SBI has also tied up with Prime chain Technologies, a startup firm, for this exercise. Other banks like ICICI Bank, Axis Bank and Federal Bank, who are working with this technology in some way or the other, have teamed up with SBI as well.
Smart contracts are ones which deploys blockchain technology, a distributed and decentralized ledger, to maintain contracts between groups. The code and agreement are public and that is why can be traced and is also irreversible and thus do not require any enforcement agency.
What is blockhain?
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance.
Blockchain has proven to be the larger value of cryptocurrencies, with implications for almost every industry. The public ledger technology uses digital signatures and cryptographic hashing to provide a record of secure transactions that cannot be altered.
Blockchain, the technology behind cyber currency Bitcoin, follows the concept of a centralised registry. Accessible to all members, and has every event is registered as an unalterable 'block'. It is also been recognized as the latest disruptive technology that could change the way transactions and data flow records are maintained.
If documents are put on the blockchain, everyone will know which invoices have been discounted by Bank X and this could prevent multiple discounting frauds.