Blockchain instead of Visa and MasterCard. Otkritie Bank experiments

Since 2016, Otkritie Bank has been conducting pilot projects with blockchain technology. Andrei Sabynin, Director of the Department for the Development of Retail and Small Business Systems of Otkritie Bank, told about this at the CIPR conference in Innopolis in May 2017.

According to him, plans for the implementation of such projects appeared at the bank in the summer of 2016. As of May 2017, they remain in such a stage, it has not yet reached industrial decisions.

Otkritie Bank began with a project to exchange information from blacklists, information about fraudsters together with Sberbank. Previously, banks exchanged such information in an uncertain format in various ways, but you can create a decentralized register of such information, which turned out to be very convenient, says Sabynin.

The bank is also experimenting with a blockchain for international payments. There is an international interbank system for transmitting information and making payments to SWIFT, and, according to Andrei Sabynin, Otkritie Bank is doing something similar to a number of partners. The bank representative chose not to disclose details on this project.

The bank also participated in a joint project with Sberbank and Ak Bars to exchange bank KYC questionnaires (KYC - know your customer, know your client) using distributed registry technology. The project replaces the manual process of exchanging paper KYC questionnaires with an electronic analogue. The special software provides a single window for changing its KYC questionnaire among all its counterparties.

Andrei Sabynin spoke about a number of pilot projects from the blockchain at Otkritie Bank "(source photo - Hightech.fm)"

Sabynin spoke in more detail about the pilot project "Individual Payments System," which has been underway since December 2016. His idea is to replace the blockchain network with international payment systems like Visa and MasterCard and ensure that payments are debited directly from the client's account, bypassing them. This would provide an opportunity to reduce the commission on acquiring, says a representative of the bank.

There are a lot of mediators in the real world. They take place because we do not trust in some sense peer-to-peer each other. Blockchain technology allows you to reduce or remove intermediaries in operations, "said Andrei Sabynin.

The bank set out a number of requirements and rules that it would like to see in this pilot. These include end-to-end identification of sellers and customers, uniform rules for joining the platform, a virtual cash desk, the blockchain itself with distributed registry technology and e-invoicing, which allows you to bill electronically, as well as a system for monitoring all processes.

The process of using this technology is simple: for example, a buyer enters the website of an online store, drives his card number and, if the seller is connected to a blockchain network, the transaction does not happen through the payment system, but through a direct debit from the buyer's account with a bank that also participates in this network.

The partner in this pilot project is a large company that sells airline tickets. Its name in the bank prefer not to disclose yet. It is assumed that subsequently on the website of this company it will be possible to pay with a card of Otkritie Bank, making debits bypassing payment systems.

Sabynin noted that there are a number of restrictions for moving to the widespread use of such a scheme. Firstly, it is very difficult to promote this story: serious financial injections and efforts are needed to advance it. The lack of banking API standards, which is necessary for the integration of other banks into the blockchain network, is also an obstacle.

There are also problems with customer identification. The current methods of card identification are closely related to international payment systems, and Otkritie Bank has not yet found other methods convenient for customers, a bank representative says.

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