The Saudi Central Bank is giving the lead in making use of blockchain technology for various banking applications:
The Saudi Central Bank (SAMA) had recently made use of blockchain technology to deposit 50 billion Saudi rials into the banking system in the country as part of liquidity package. This signified the central bank’s confidence in the technology and the maturing of a blockchain-based system in the kingdom for monetary transactions. SAMA has been at the forefront in experimenting with newer technologies for the financial services and among its recent initiatives are the Fintech Saudi Initiative in cooperation with the Capital Market Authority (CMA), the introduction of the SAMA Regulatory Sandbox, and an array of digital banking services and payments.
PART OF VISION 2030
Saudi Arabia has been using blockchain technology since 2019. The Saudi British Bank (SABB) and HSBC had used the technology to execute a trade transaction involving a shipment of homogenized aluminum billets from Bahrain to Saudi Arabia. The Saudi Customs Authority had also experimented with the technology in early 2019 to facilitate cross-border trade. These initiatives were part of the kingdom’s Vision 2030 strategy, aiming to accelerate economic diversification and modernization through the adoption of new digital technologies.
Yet another blockchain-powered initiative in the kingdom is the ‘Global Value Chain’ (GVC) passport to boost trade finance and cross-border trade. Blockchain technology will provide GVC passport a distributed, trusted, real-time source for global regulators to verify business accreditation claims. The proposal was recently made before a group of B20 business leaders. The project is being developed in partnership with the OECD. The passport is intended to be a more efficient financial system with firms – especially small and midsize ones that normally lack a global presence – cut free from repetitive, redundant, cross-border regulatory burdens. A report placed before the B20 meeting said such a GVC passport could provide an authenticated, authoritative, verifiable financial fingerprint of a given entity, enabling it to operate within GVCs without the need to reproduce the same documentation on multiple occasions, nor undergoing duplicative verifications.
WHOLESALE CBDC
The central bank has also collaborated with the Central Bank of UAE in an initiative to develop a joint Central Bank Digital Currency (CBDC) and the report of the project, called Project Aber, has just been released, which puts great emphasis on blockchain and DLT in creating the proposed CBDC with all security and transparency. Called the Wholesale CBDC, it will be issued by the 2 central banks and will be used only by them, and the banks participating in the initiative, as a settlement unit for domestic as well as cross-border commercial bank transactions between the 2 countries.
SAMA is now part of RippleNet allied banking blockchain network, a measure that is intended to help domestic banks settle payments and transactions with regional banks to make secure monetary transfers faster and cheaper. As part of this, Al Rajhi Bank made Saudi Arabia’s first-ever blockchain wire transfer from its Riyadh headquarters to one of its branches in Jordan.
SECURING ATM
Alhamrani Universal, the largest fintech solutions provider in the self-service banking industry in Saudi Arabia is collaborating with ShoCard, a digital identity and authentication platform built on a public blockchain data layer, to develop a secure identification system of ATM users by employing a combination of blockchain and biometrics. The merger of the 2 security systems would mean the deployment of the world’s first 5-factor authentication for top-of-the-line security.
The kingdom has some of the best blockchain development enterprises working in varied fields. Among them are Hyperlink Infosystem, which has a pool of talented blockchain developers, Cybosol, which is a specialist in blockchain development and cloud computing firm, Osit, specializing in blockchain development and mobile apps, Dopravo, also into blockchain development, ISAMA, which specializes in creating identities, branding business, and making it look entirely professional, and UXBERT Labs, which is using blockchain technology to allow a new frictionless and distributed economy with inclusion for all.
