The State Bank of Pakistan (SBP) has made a unique proposal asking local banks if they would be willing to deploy a revolutionary ‘blockchain technology’ in order to protect financial transactions and reinforce online payment systems. A senior executive at the SBP released the information to the media.
Inayat Hussain, SBP’s Executive Director Banking Supervision Group, said “We may adopt the system of ‘blockchain’ to facilitate trades. Banks may approach the SBP and tell if they want to use the new technology.” He was speaking at the 15th Innovative Diebold Nixdorf ebanking 2017 conference organized by Total Communications in collaboration with Pakistan Software Houses Association (PASHA).
According to Hussain, the central bank is currently researching the blockchain technology model, which is being adopted by central and commercial banks in several countries in order to safeguard online financial transactions against cyber attacks.
Blockchain technology allows for contracts to be embedded digitally and to be stored in transparent but shared databases. This keeps them protected from deletion, modifications and revision without access. This method can help two parties to record transactions efficiently and in a verifiable manner.
The central state banks of India and Canada have already adopted the technology and are experimenting with new solutions.
SBP is also about to revise the role of Chief Information Officers. They will now be tasked to detect and handle cyber crimes and similar online threats.
October 2016 was the last time SBP updated its payment system rules. Hussain added “Since then we have provided permission to three entities to play their role as Payment System Operators and Service Providers.”
He said that initially banks were slow to adopt new technology but now they are working to be on par with international practices.