Over 120 Brazilian Banks exploring Blockchain

Febraban, the Brazilian Federation of Banks with over 120 associated banks, is actively exploring and researching blockchain technology.

The Federation has published tests that have been carried out on different platforms such as CORDA of the consortium R3. Recently, it has announced the addition of another event, the CIAB Febraban, whose talks to start in June 2018 will be on Artificial Intelligence, Machine Learning, Blockchain, IOT and how these changes can quickly create or destroy a business.

Since 2016, the Federation has explored the potential of the blockchain, creating the Blockchain Working Group the same year. The group composes of members of the Technology and Banking Automation Executive Committee – Banco do Brasil, Bancoob, Banrisul, Bradesco, BTG Pactual, Caixa, Citibank, Itaú Unibanco, JP Morgan, Safra, Santander as well as the Brazilian Central Bank, CIP and B3, a new company resulting from the merger of BM & FBOVESPA and Cetip. Last year, Febraban also organized its first-ever blockchain event focused on the use of technology. It announced that blockchain tech allied with Artificial Intelligence (AI) is the focus of the institution.

According to a survey conducted by the federation last year, 65% of industry executives in Brazil said that their companies study blockchain implementation and 29% already evaluate analytics and cognitive computing or AI experiences.

Proof-of-Concept

According to the Federation, the first proof of concept, called Fingerprint, used the Corda platform and involved Brazilian banks Itaú, Bradesco and B3. The test developed in the R3 cloud lab created a database with fictitious information such as name, Brazilian official documents of identification (CPF and RG), age, address and telephone with document storage. The result has proven the ability of banks to operate collaboratively, with the guarantee of immutability of shared data, preservation of privacy and traceability of information.

The second proof of concept (DNA) was developed in Hyperledger, supported by IBM, this time with the participation of all the institutions of the FEBRABAN Working Group. The tests allowed to evaluate the current capacity of the platforms, the differences between them and aspects related to the development. The next step is to carry out a pilot scheme, which is in the process of being set up and will be started soon after the conclusion of the DNA.

Besides these, according to Febraban, Bradesco bank evaluates platforms in back office processes and solutions for startups of the program InovaBRA. One of the proofs-of-concept is related to guarantees in financial operations, such as the creation of an application to communicate with all members of the chain – for example, other particular banks.

Febraban revealed that the Central Bank of Brazil is using the Ethereum platform to support the Reserve Transfer System (STR), one of the components of the Brazilian Payment System (SPB). The solution will be implemented in the event of any failures of existing platforms, the association added. “The regional ones could work through an alternative transfer system using DLT technology,” explained Aristides Cavalcante, deputy chief of the Information Technology Department of the Brazilian Central Bank.

Febraban also revealed that it has been working with startups, among them e-Wally, a digital portfolio that has been testing Blockchain in the community of Paraisópolis, one of the smallest low-income regions in São Paulo. The solution enables non-cost operations such as deposit, transfer and payment of bills, and allows any user to take ATM paper, earning per transaction fee, according to the startup site. All bank transactions are blockchain encrypted and allow distributed platform handling and auditing.