Bank Of America Merrill Lynch Supports Blockchain Innovation For Trade Finance
In an interview released on September 22, 2017, Peter Jameson, co-head of product management, GTS EMEA at Bank of America Merrill Lynch, spoke on the merits of blockchain technology and what it can bring to trade finance.
Jameson's take on blockchain technology is optimistic and he thinks it can provide immediate benefits. He said, "The distributed nature of blockchain means that you could quite easily move from a place where a lot of things have to happen in sequence to a technology where a lot of the players involved in the transaction can do what they need to do all at the same time." The so-called atomic swap, or instantaneous exchange of ownership, can easily be facilitated by blockchain-based settlement systems and executable distributed code contracts (also called smart contracts). Jameson said this capability is very powerful, given "the slow nature of some of the trade transactions today."
Jameson goes on to say blockchain technology cannot solve the trade finance world's problems on its own, and will likely work in conjunction with other technologies needed to create data channels that integrate with a blockchain. "How you actually digitize some of that paper at the outset, plus the distributed nature of the blockchain, I think in the future is going to make it a very powerful tool."
Identifying important innovations such as optical character recognition, robotics, and AI, Jameson portrays a possibility of these tools working in conjunction with blockchain systems in order to make prevalent the digitization of trade services.
Jameson also spoke of a need for a common-standards approach since the challenge involves constituents beyond banks, such as buyers, sellers, and government agencies.
Jameson said that 2017 should be a watershed year for blockchain technology as it relates to trade finance:
"In 2016 there was a lot of focus on the FinTechs and people looking at proofs of concept...In 2017 we're really seeing the rubber hit the road. We're seeing consortia of banks come together. Groups of banks and third parties start looking at making blockchain a practical reality, so I’m expecting to see that over the next 6 to 12 months we're going to start to see some of the things that industry has been working on, including some of the proofs of concept that we have been working on at Bank of America Merryl Lynch, really become a practical reality."
Once those steps are taken, Jameson said the industry can focus on customer needs and adjust to those demands.