{"id":2290,"date":"2017-03-10T12:40:24","date_gmt":"2017-03-10T20:40:24","guid":{"rendered":""},"modified":"2023-07-17T12:19:46","modified_gmt":"2023-07-17T19:19:46","slug":"from-paper-to-blockchain","status":"publish","type":"post","link":"https:\/\/newed.any0.dpdns.org\/en-us\/industry\/blog\/financial-services\/2017\/03\/10\/from-paper-to-blockchain\/","title":{"rendered":"From paper to blockchain"},"content":{"rendered":"

Microsoft and Bank of America Merrill Lynch\u2019s blockchain project is taking the complexity, cost and error out of labor-intensive trade finance processes. We find out more about the work they\u2019re doing together.<\/em><\/p>\n

Microsoft and Bank of America Merrill Lynch (BAML) recently went public about the work they\u2019re doing around blockchain. The two are building and testing blockchain-powered financial exchanges on Microsoft Azure \u2013 Microsoft serving as the technology provider and test client, through Microsoft Treasury, and BAML providing the necessary trade matter subject expertise. Their aim is to develop applications that optimize trade finance processes, which tend to be highly manual, time consuming and costly.<\/p>\n

\u201cBlockchain can transform our business,\u201d says Chris Bozek, who leads the Global Trade and Supply Chain product team at BAML. \u201cSpecific to trade, there is significant potential because it is inherently a document heavy business. It relies on bilateral exchanges of documents that need to be reviewed, agreed upon and then complied with to satisfy the financial side of the transaction. It\u2019s an exciting time as we learn how to take advantage of technology to not only accelerate transactions, but reduce risk and cost, and improve transparency for all parties.\u201d<\/p>\n

Marley Gray is a leader on the Microsoft Azure Engineering team, which has been tasked to help identify where and how Microsoft Treasury can use this distributed ledger technology to improve its operations. \u201cMicrosoft Treasury is a perfect use case for blockchain,\u201d says the principal program manager. \u201cThe unit manages over US$150 billion in assets and, as our company has moved from a products to a services selling strategy, its processes have become far more complex.\u201d<\/p>\n

To start with, Microsoft and BAML have been focusing on standby letters of credit \u2013 documents issued by a bank, providing payment assurance on behalf of a client should the counterparty not perform as intended. \u201cThe application process has traditionally been a long, painful one,\u201d says Gray. \u201cIt was manual, took too long and also had a very high error rate, because of the number of steps and parties involved.\u201d<\/p>\n

\u201cThe challenge was to understand how blockchain can reduce cycle time and also provide Microsoft with a better risk view \u2013 not only from a portfolio but from a client perspective,\u201d explains Bozek.<\/p>\n

\u201cOur paper-based process took five days,\u201d says Gray. \u201cWith blockchain, the cycle time was reduced by more than half, regardless of how many parties were involved. And the error rate went down from 50% to zero.\u201d<\/p>\n

Microsoft and BAML are now refining the technology and exploring how they can apply blockchain to other trade financing products. \u201cWe can now tackle additional transaction types using our standby letters of credit solution as a basis,\u201d says Bozek. \u201cIt\u2019s a great solid foundational product for us to build upon.\u201d<\/p>\n

Over time, they also expect to add new features from Project Bletchley \u2013 Microsoft\u2019s open, modular blockchain fabric powered by Azure \u2013 and bring more parties into the mix.<\/p>\n

\u201cIt\u2019s been a very good learning process to see first-hand how a treasurer is evaluating the benefits of blockchain specific to trade transacting,\u201d says Bozek. \u201cAs we work through the adoption challenges of this new technology, we\u2019re gaining some valuable insights into blockchain as a service and transacting in the cloud.\u201d<\/p>\n

Read more on the Microsoft Banking & Capital Markets <\/a>and Insurance<\/a> blogs.<\/p>\n

\"The
\nThis article was originally published on The Record.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Microsoft and Bank of America Merrill Lynch\u2019s blockchain project is taking the complexity, cost and error out of labor-intensive trade finance processes.<\/p>\n","protected":false},"author":843,"featured_media":10222,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ms_queue_id":[],"ep_exclude_from_search":false,"_classifai_error":"","_classifai_text_to_speech_error":"","footnotes":""},"categories":[1523],"post_tag":[],"content-type":[1484],"coauthors":[4309],"class_list":["post-2290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","content-type-partners"],"yoast_head":"\nFrom paper to blockchain - Microsoft Industry Blogs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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