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Africa’s largest by assets, Standard Bank Group has partnered with Hedera Hashgraph, an enterprise-grade distributed public ledger to enable the bank to establish the continent’s first Hedera network node which will bolster the development of cross-border trade, an area that had a variety of problems historically.
Challenges that were creating bottlenecks in cross-border trade included lengthy settlement periods, information asymmetry between multiple parties involved in a transaction, which ended up creating delays in receiving approval from intermediaries and little to no visibility or transparency for all parties involved.
Hedera’s distributed ledger technology (DLT) effectively allows for the sharing of information between two parties involved in a transaction and ensures that that information or data is in fact credible and authentic without the need for a trusted intermediary.
Transactions conducted via the DLT platform are not confirmed until all data fields and conditions are met. This creates a transparent environment and allows for trades to be settled faster and more efficiently.
Standard Bank Group has been a pioneer in leveraging blockchain and distributed ledger technologies to bring speed and transparency to its customer base across Africa.
Commenting, Adrian Vermooten, Standard Bank’s Chief Innovation Officer said, “As an organisation, we have established that blockchain technology can track and leapfrog legacy issues that prevent a seamless and transparent payment experience for the customer, which ultimately enables cost savings for all stakeholders.”
“It is within our vision to enable the group and our clients to connect with networks, within and outside of the Standard Bank Group,” he added.
While domestic payments are already instant, cheap and transparent, cross-border transactions are subject to several complications such as dependency on banking networks. Many of these challenges are removed when conducting cross-border payments with digital currencies like stablecoins based on a DLT platform.
Stablecoins are designed to minimise price volatility by pegging the currency to a relative or particular “stable” asset or basket of assets. The digital currency provides instant settlement and high liquidity and visibility, which in turn helps businesses to track the process and manage their own liquidity needs. This is critical in the current cash-crunch environment.
Ian Putter, Head of DLT/Blockchain at Standard Bank Group said, “As we see increasing interest in Central Bank Digital Currencies (CBDCs), tokenization of assets, and utilisation of stablecoins, it has become increasingly clear that digitisation of assets will impact all facets of our business, and we must strategically plan for these pieces to work seamlessly together.
As part of the partnership, Standard Bank has also joined the Hedera Governing Council, a growing network of the world’s largest enterprises and organisations, including Avery Dennison, Boeing, Dentons, Deutsche Telekom, DLA Piper, eftpos, FIS (WorldPay), Google, IBM, LG Electronics, Magalu, Nomura, Swirlds, Tata Communications, University College London (UCL), Wipro, and Zain Group.
Members of the Hedera Governing Council are responsible for running the initial nodes of the Hedera network, as well as guiding both strategy and software development, over a maximum of two consecutive three-year terms. This ensures stability and is conducive to maintaining diversity and decentralisation of the public network, with a governance model that eliminates the risk of forks, safeguards users, and preserves the integrity of the Hedera network.
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