The company Fintech MonetaGo and Swift India are currently experimenting with a blockchain-based fraud mitigation solution with a number of Indian banks.
The pilot program will see banks use Swift's messaging service to pass information to and from the MonetaGo fraud mitigation network, a blockchain-based solution launched in March of this year. The application helps banks to reduce fraud in credit financing by allowing them to check whether the invoices have already been financed and verify the authenticity of the electronic waybills.
The blockchain network allows a bank to delete certain invoice items, create a unique fingerprint for it and then publish it on the network. The bank can then apply different states to the bill, for example if it has been registered or funded. MonetaGo is also working to add other states, including if an invoice has been registered with the tax authority.
Talking about GTRJesse Chenard, CEO of MonetaGo, says: "By leveraging Swift's messaging infrastructure to pass the messages back and forth to the blockchain we already have in production, it creates a simple point of integration for the banks, instead of having to integrate the Live APIs and understand authentication and encryption mechanisms: It removes many of the complications of going through the firewall with each bank and creating a standard integration. "
The pilot through the Swift messaging format has been running since last month, with four unnamed Indian banks now actively testing the solution.
According to Chenard, MonetaGo is also working to expand the solution in Latin America, with two countries expected to enter service in the first quarter of next year. "I'm going to push for this to go through the Swift messaging terminals because it's a very elegant way of doing things," he says, adding that he believes this is the first time that a solution that combines Swift messaging with blockchain will go in production.
Swift has in turn experimented with the blockchain, exploring the use of technology for our real-time reconciliation, even if it has not brought the proof of the concept up to now. But with a new use and position case, Swift now seems to give blockchain another chance.
"Given India's focus on a digital infrastructure supported by both policy and technological innovation, it is logical that large institutional actors are interested in these products and initiatives," says Chenard. "This work will have a positive impact on the information available to the banking sector in general".
Double funding remains a major challenge for lenders all over the world, who have limited ways to check whether an invoice has already been funded by another lender. Blockchain technology has been labeled as an ideal solution for this problem. A decentralized register, like the one created by MonetaGo, allows financiers to cross-reference an invoice before committing to finance it, keeping the data confidential and secure, and could save the industry millions of dollars each year in fraudulent billing .
MonetaGo is not the only organization that relies on the blockchain to tackle this problem. The fintech company based in Singapore Trade Finance Market recently launched the World Blockchain Trade Consortium (WBTC), which brings together non-bank financial operators to combat commercial financial frauds in a similar way, albeit through a proprietary application rather than using Swift's messaging service. The success of the blockchain ultimately depends on obtaining critical mass from the industry, and MonetaGo's pilot with Swift is the latest demonstration of growing interest from the financial community in adopting the technology for this particular case of use.