Blockchain will help reinvent financial processes, say companies

Interoperability and coexistence between different systems will be the keynote of evolution in business financial processes with the arrival and increasingly frequent adoption of blockchain-based solutions. This was the main point of union between the participants of the panel “Blockchain reinventing financial processes”, a discussion that was part of the “Blockchain Finance Brazil 2022”, organized by Blocknews and Cantarino Brasileiro.

The panel was attended by R3’s country manager in Brazil, Gustavo Paro, IRB Brasil Resseguros’ CIO, Marcelo Hirata, and Bradesco’s research and innovation specialist, George Marcel Smetana. The vision of the executives converges in the sense that blockchain technology will increasingly be part of the solutions in models of coexistence between traditional financial processes and contracts developed on blockchain.

For the insurance segment, which involves an immense chain formed by insurance companies, reinsurers and customers around the world, blockchain is seen as an agile and inviolable way to evolve processes. “At IRB we see an ocean of possibilities for blockchain applicability. We have contact with practically all the participants in this ecosystem, which is mature in its processes and has a need for security and privacy”, said the CIO of IRB Brasil RE, Marcelo Hirata. According to him, a series of tests have already been carried out and blockchain technology has proved to be effective in terms of security and privacy.

Hirata recognizes, however, that the task of convincing people around the use of a new and disruptive technology such as blockchain is not simple. “It is natural for organizations to want to understand more deeply about the technology, to mature the issue. But we have the project in partnership with B3 (solution to connect insurers and reinsurers in a single network) and the support of Susep (Superintendence of Private Insurance, regulatory body of the insurance market), in the sense of provoking and accelerating the adaptation of new technologies by insurance companies”, says the CIO.

Blockchain processes become more agile

Bringing together all the ends involved in a trade finance process is not trivial, observes Bradesco specialist George Marcel Smetana, who is involved in Marco Polo. The solution is for commercial financing that began to be developed in 2019 on the Corda platform.

In the case of Marco Polo, the challenge includes joining four ends: importer, exporter, importer’s bank and exporter’s bank. “There is a desire to be part of the initiative, but the processes take time, there has to be an internal conviction between all parties, so this delay is common in the enterprise world”, says Smetana.

The coexistence between traditional finance systems, tokenization strategies and the creation of digital assets is reinforced by R3’s country manager. “Over the next 2, 3 years, we will see increasing interoperability and coexistence between these assets. For many years we have seen the traditional financial market walking on a parallel road to the crypto world and what we are seeing now is that these roads are leaning and should converge at some point”, ponders Gustavo Paro.

Getting governance right is key

The issue of project governance is another point highlighted by the panelists. According to Paro, in the case of Marco Polo and Contour (foreign trade financing), both carried out on the Corda platform, technological development took one-third of the time, while two-thirds were devoted to governance.

“Defining governance is what takes the longest in a project that involves major players in the chain. Bringing everyone together to agree on the rules of the business, with the flow to be followed, with the standardization of deliveries, none of this is simple”, says Paro, stating that the Marco Polo project did its homework almost two years before to actually launch the transaction.