Blockchain's secure architectural design, as distributed computing system with high Byzantine fault tolerance, with decentralized and inherently resistant to modification of the data, makes it an ideal platform for cross-border payment settlements.
As an open distributed ledger, Blockchain can serve as record for transactions between two parties efficiently and in a verifiable and permanent way.
J.P. Morgan is toeing the path, as it creates what is arguably one of the largest blockchain payments networks, the Interbank Information Network (IIN), will significantly reduce the number of participants needed to respond to compliance and other data-related inquiries that delay international payments.
And the Royal Bank of Canada, Australia and New Zealand Banking Group are the first banks to join the new blockchain network.
While the IIN represent a narrowed-down cross-border payment volumes, IBM unveiled their own cross-border blockchain payments service, which has been heralded as able to improve efficiency and reduce the cost of making global payments.
The IBM's Blockchain Platform, is a cloud-based service that will enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.
Backed by the KlickEx Group, a United Nations-funded, Pacific-region financial services firm, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, the IBM's platform also allow consumers in developing nations to transfer funds directly to mobile wallets.
Though cross-border payments processing is complex and includes multiple layers of communication among payment participants to verify transactions – an operation known as payment and settlement, blockchain technology could reduce infrastructure costs for eight of the world's 10 largest investment banks by an average of 30%, "translating to $8 billion to $12 billion" in annual cost savings for those banks.
The technology will ultimately eliminate the need for reconciliation, confirmation and trade break analysis as key parts of a more efficient and effective clearance and settlement process.
