- Raiffeisen Bank International and distributed ledger technology provider Billon joined hands to pilot a digitized version of Europe’s national currency.
- RBI and Billon’s proposed digital currency aims to make the transactions within the banking ecosystem more efficient and transparent.
- The pilot which operates as a part of the bank’s tokenization platform, RBI Coin, is planned to be launched by the end of the year.
It’s no secret that there is a growing trend among private and central banks to partner with blockchain startups to improve transparency.
The latest one to do so is Austrian bank Raiffeisen Bank International (RBI) which ran a pilot with Polish-British Blockchain Company Billon in a bid to digitize bank account cash as RBI Coin.
Boasting of 16.7 million customers, the bank which conducts most of its operations in Central and Eastern Europe saw a massive benefit with respect to RBI Coin. The tokenization platform was developed by Billon during the Elevator Lab program earlier this year.
The project leverages Billon’s Digitized Distributed Cash system, which enables tokenization of national currency. In simple words, the pilot capitalizes on a new form of national currency tokenization using Billon’s distributed ledger technology.
The tokenization platform enables banks to choose a transfer method that provides “increased speed, more certainty of payment status, reduced exception handling and the ability to substantially reduce customer inquiries,” the bank affirmed.
By using the system, digital transactions can be supplemented with additional documents such as invoices and confirmation of source of funds.
The focus will be on making pure payments faster, more transparent so that customers can be updated with the status, and potentially reduce exception handling. “If successful, the project could be deployed in CEE countries where RBI operates,” the bank said in a statement. The pilot is scheduled for the end of the year.
The pilot will be tested for selected use cases such as instant tokenized money transfers and improving the cut-off time for customers. The project essentially will enable businesses to improve their liquidity management and availability of cross-border funds transfers.
“Billon is a great example of a fintech that understands how to adapt blockchain to serve the needs of banks and their clients,” said Stefan Andjelic, Blockchain Hub Lead at RBI. “Specifically during the COVID-19 situation, banks need to partner with fintechs to innovate faster and help clients with payments processing and liquidity needs.”
Billion has been going from strength to strength as it recently raised $6 million in its Series A with backing from players such as FIS. And with this deal with RBI, the startup expects that the bank will experience an improved customer experience as it will cut costs, time as well as potential inefficiencies.
Commenting on the partnership, CEO of Billon Group Wojtek Kostrzewa is bullish about the success of the project. He said:
“Raiffeisen Bank International, as a large international financial institution and a leading bank in CEE, is a partner that Billon aspired to work with since the company was created. Seeing RBI’s eagerness to implement innovative technologies and engagement in the Elevator Lab program, I am confident the collaboration to implement the tokenization platform will have a very strong and positive effect on both companies.”
Banks encouraged to go digital
RBI is hardly alone. Elsewhere, other central banks too are considering launching their own digital currencies.
JP Morgan has too developed a digital currency, JPM Coin, to smoothen intra-bank transfers for its clients. While the bank has started trials, it has not become a part of its day-to-day services yet.
Lately, VISA too grabbed the headline after it filed for a patent in the United States to develop a digital fiat currency, with the aim to help central banks.
These moves are in an attempt to escalate the use of digital money. According to a recent report by the Bank for International Settlements (BIS), physical cash could transmit sorts of viruses, which is dangerous given the current pandemic COVID-19 has already circa 5 million people. Therefore, BIS urged banks to use digital methods for payment transactions.