Blockchain can improve India's trade finance system but must address certain challenges: Report
Banks in India should start conducting proof of concept with blockchain technology to get a deeper understanding of its likely implication in trade and finance.
New Delhi: Blockchain along with other digital technologies including artificial intelligence (AI), machine learning and robotic process automation could resolve inefficiencies in the country's current trade finance system and make the process efficient, a recent study said.
Titled "Role of trade finance for inclusive growth", the joint study by Assocham and professional services firm Deloitte said here on Thursday: "Blockchain's application for identity management and 'know your customer' (KYC) looks quite promising."
Banks in India should start conducting proof of concept with blockchain technology to get a deeper understanding of its likely implication in trade finance if implemented in the overall system, the study noted.
However before a widespread adoption, blockchain must address certain implementation challenges - onboarding users, regulatory acceptance, changing role of banks, infrastructural issues and firms and businesses operating on a small scale, it said.
It added that innovation in AI is also moving very fast and it too has enormous application to solve real problems. It could be used to detect transactions quality, or opportunity to market cross channels, to ensure banks are utilising their resources optimally, the study said.
On the state of the country's trade, the study said, while 2017 saw global trade expansion as a consequence of acceleration in trade growth in the first six months of the year, India's slow growth of trade has been a concern.
"Many are attributing this short term down turn as a negative fallout from the reforms - demonetisation and goods and service tax (GST)," it said.
The report however said that fine-tuning GST data that feeds information technology platforms will have a significant impact on trade finance.
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