DBS, JP Morgan and Temasek announced today (April 28) their plans to develop an open industry platform for processing payments, trading and foreign exchange through a newly formed technology company.
Called Partior, it aims to disrupt the traditional “hub and spoke” model for cross-border payments, which is typically costly and lengthy due to multiple validations of payment details by banks.
Partior aims to meet the need for efficient digital clearing and settlement solutions across the banking industry and to address these challenges through the use of blockchain solutions.
The Partior platform aims to develop wholesale payment slips based on digitized commercial bank money to enable “atomic” or instantaneous processing of payments for various types of financial transactions. This would help banks cope with the challenges posed by the existing method of processing global payments.
The platform will begin with an emphasis on facilitating flows between Singapore-based banks in USD and SGD with the intention of expanding the service offering to other markets and in different currencies.
Partior’s platform is also designed to complement the Central Bank’s ongoing digital currency initiatives and use cases (CBDCs).
Banks are encouraged to join the platform
The operation of Partior by DBS, JP Morgan and Temasek, as well as the completion of the development, launch and availability of services on the proposed platform are subject to the necessary regulatory approvals and permits.
After completion, the platform will provide a 24/7 infrastructure with which financial institutions and developers can jointly create applications that support use cases such as FX Payment Versus Payment (PVP), Delivery Versus Payment (DVP) and peer-to-peer escrow accounts to supplement and value creation of global financial ecosystems.
“The current hub-and-spoke arrangement for global payments often causes delays as confirmations from various intermediaries are required before an agreement is considered final. This in turn has ramifications and leads to inefficiencies in the final liquidation of other assets, ”said Piyush Gupta, CEO of DBS Bank.
“By taking advantage of blockchain and smart contracts technology, the Partior platform will address current issues of friction. The open platform will enable banks around the world to provide cross-border multi-currency payments, trade finance, foreign exchange and DVP securities settlements in real time on a premier platform, with programmability, immutability and traceability built into their range of services. ”
To encourage broad participation across the banking industry, Partior will actively encourage leading banks to join the platform to set the scale required to benefit the industry.
Chia Song Hwee, Temasek’s Deputy CEO, announced that they have received interest from other banks and partners and looks forward to welcoming them on board as this new platform expands.
Project Ubin / Photo credit: MAS
This effort by DBS, JP Morgan and Temasek builds on their previous work on Project Ubin, an industry initiative by the Monetary Authority of Singapore (MAS) to research the application of blockchain technology to multi-currency payments and billing.
“With its emergence from the Ubin project, Partior is a pioneering step towards providing a basic global infrastructure for handling digital currencies in a trusted environment that sparks a variety of use cases in the blockchain ecosystem,” said Sopnendu Mohanty, Chief FinTech Officer of MAS.
Last December, DBS also planned to set up a digital exchange to help both institutional and accredited investors take advantage of fully integrated tokenization and digital asset trading.
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Selected image source: Citywire Asia / Munshi Ahmed via Getty Images / Shutterstock