Emirates Islamic Bank, one of the leading financial institutions in the UAE is embedding block chain technology in cheques as a fraud prevention measure.
While globally, online and plastic transactions have increased, payment by cheque is still very popular, and adding further security to cheques is expected to increase its use. All cheque books issued by Emirates Islamic Bank will now have a unique QR (Quick Response) code on every leaf, along with a string of twenty random characters.
According to Emirates Islamic Bank Chief Operating Officer Suhail Bin Tarraf, “with the implementation of this in our system, block chain will dramatically reduce cheque fraud as well as help us provide our customers with greater peace of mind. Block chain significantly increases security and protection in banking transactions and we are the first in the UAE to utilise this new technology,” says Tarraf.
In the next phase of Emirate’s block chain project, the bank claims it will have each cheque leaf registered on the Bank’s block chain platform enabling it to validate the authenticity of the cheque at source.
According to our research, Emirates Islamic Bank is not the first bank in the region to use block chain; Emirates NDB is already using block chain technology in its cheque transactions too.
An Emirates NBD official says, “that block chain will bring an added layer of security to our cheque clearing system, and ensure that each cheque issued will be verified under the bank’s system with its own unique QR code providing significant improvement in cheque security”.
The National Bank of Abu Dhabi (NBAD) is the first in the region for using block chain-based technology to transmit cross-border payments.
UAE banks are not the first to implement this world-wide. In August 2016, Hitachi Ltd and Bank of Tokyo-Mitsubishi UFJ Ltd announced a Proof of Concept (PoC) that uses block chain technology for digitisation of cheques in the Republic of Singapore.
According to Wamda Research Lab (WRL) report, fintech investment in the Middle East region is set to grow by 270 percent this year. The region is still in the early stages of fintech compared with more advanced economies, but the foundations are certainly being laid.
WRL and Payfort, a Middle Eastern online payment gateway provider report found that fintech companies in the region expect to raise AUD 65 in 2017, compared with AUD 23.41 million in 2016. It says the region’s fintech firms had raised only AUD 130 million over the past ten years.
In January 2017, a report by Accenture and McLagan says that block chain technology could cut infrastructure costs for eight of the world’s ten largest investment banks by an average of 30 percent, translating to AUD 10.45 billion to AUD 15.61 billion in annual cost savings for these banks.
According to Santander InnoVentures, in collaboration with its partners Oliver Wyman and Anthemis Group paper on Fintech 2.0, distributed ledger technology may reduce banks’ costs attributable to cross-border payments, securities trading and regulatory compliance by between AUD 19 billion to AUD 26 billion per annum by 2022.
A recent survey by the World Economic Forum has also predicted that 10 percent of global gross domestic product will be stored on block chain technology by 2025.