Fraud and paper invoices urge blockchain payments for banks

Standard Chartered has lost USD 200 million from a fraud at China’s Qingdao port in 2014. In another example, a trans-Atlantic fraud conspiracy that used fictitious purchase orders and fake invoices to get loans for metal shipments was estimated in 2008 to have cost banks including JPMorgan Chase close to USD 700 million.

A reason behind these fraud attacks is the lack of a common platform for banks to screen transactions financed by other banks due to confidentiality concerns, leading to customers who may capitalize on this information-sharing gap to obtain financing from multiple banks using the same invoice according to Bloomberg.com.

In 2014, Standard Chartered has teamed up with DBS Group Holdings to develop an electronic ledger of invoices that uses a parallel platform to the blockchain employed in bitcoin transactions. In 2015, banks conducted a similar trial - code-named TradeSafe - that used a shared ledger of as many as 60 mock invoices. Now, Standard Chartered and DBS are working with the Infocomm Development Authority of Singapore, a government agency that seeks to advance technology and telecommunications in the city, to promote the distributed ledger used in the TradeSafe trial.

Despite the incentives, blockchain will only be able to solve the fraud problem if banks agree on common standards in adopting the same invoicing platform and common messaging standards, bloomberg.com continues.