IBM has partnered with Stellar, a platform connecting diverse financial systems and enabling low-cost financial services, on a new blockchain banking solution that aims to enhance universal cross-border payments.
This solution intends to increase the speed at which banks settle and clear payment transactions in near real time.
IBM and Stellar have planned to advance their blockchain solution in the South Pacific region.
In fact, the solution is already operating live transactions in twelve currency corridors across the Pacific Islands and Australia, New Zealand and the United Kingdom.
The blockchain distributed ledger technology provides access to all parties involved when it comes to the clearing and settlement of financial transactions.
As a result, sending money in near-real time across borders becomes easier and cheaper for merchants and consumers
This step indicates IBM’s acknowledgement of the role that digital currencies play in the blockchain banking industry. In fact, Stellar’s built-in currency, Lumens will be used in order to facilitate cross-border payments, given that banks currently use foreign accounts in local currency to fulfill these transfers. The current situation leads to a slow and costly payments process.
Furthermore, Jed McCaleb, co-founder of Stellar stated: “This new innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole. We are using blockchain technology in production to facilitate cross-border payments in multiple integrated currency corridors. Currently, cross-border payments tend to take up to several days to clear. This new implementation is poised to start a profound change in the South Pacific nations, and once fully scaled by IBM and its banking partners, it could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations.”