Dubai has launched the UAE’s first government-endorsed blockchain platform, which it says will serve as “a stepping stone for organisations in the UAE and globally to transition their blockchain testing and development into full production”.
Built locally, the Dubai Blockchain Platform is delivered by Smart Dubai, a government agency, and IBM.
It forms part of Dubai’s vision to become the world’s first paperless government by 2021. Smart Dubai has previously estimated that by adopting blockchain technology, the emirate could unlock AED5.5bn in savings annually in document processing alone.
The Dubai Pay Blockchain Settlement and Reconciliation System, which was launched last month, will be among the first service to be migrated onto the platform. The new system allows Dubai’s department of finance to reconcile and settle payments with other government entities, banks and financial institutions in real time. That is a significant improvement from the 45 days the process used to take, and which relied on staff members manually going through payments collected from various portals, deducting fees and then transferring the remaining amounts to the relevant authority.
The aim is ultimately to run all applicable government transactions on blockchain and “make Dubai a global benchmark for city-wide blockchain implementation”, Smart Dubai writes in a statement. The Dubai Blockchain Strategy also involves the creation of an open platform to share the technology with cities across the globe.
“With the launch of the Dubai Blockchain Platform today, we will be one step closer to implementing blockchain-powered services and experiences into citizens’ day-to-day lives,” says Wesam Lootah, CEO of Smart Dubai.
The UAE is increasingly attracting international banks and firms looking for a location to realise their blockchain ambitions, particularly in the trade finance space. With this new announcement, the country undoubtedly marks itself further as a place where blockchain projects can bloom.
HSBC, for one, is considering the UAE as a location for conducting its next letter of credit blockchain pilot, with Sunil Veetil, the bank’s regional head of trade, calling it an “ideal place” for testing this technology. Speaking to GTR for its recent Fintech Issue, he said HSBC is currently in discussions with UAE regulators, who are keen to provide the necessary support for the bank’s blockchain initiative.
“When there is a push from the top, things do get done in this part of the world. There is currently a large focus on blockchain, fintechs are opening up, banks are encouraging fintech and accelerators, and we have our own hubs where we work with locally groomed startups. Definitely I can see that interest is very high in the region, within the government and the regulators. And they are quite nimble, they move quickly,” he said, referencing Smart Dubai as one example of this.
HSBC’s project would see the bank expand a blockchain pilot it conducted together with ING for agrifood trading giant Cargill earlier in the year. Known under the name Voltron, the system enabled transaction time for a letter of credit to be reduced from a standard five to 10 days to 24 hours.
Standard Chartered, meanwhile, announced in late-August that it had chosen Dubai to kick off an “industry-first client pilot” for blockchain-based smart guarantees in trade finance, together with Siemens Financial Services and blockchain firm TradeIX.
TradeIX’s CFO Daniel Cotti specifically quoted the government’s “enormous drive for digitalisation and blockchain” as one important reason for choosing that location over others. Motasim Iqbal, Standard Chartered’s head of transaction banking in the UAE, added that the Dubai Smart City initiative could further harness the technology.
Dubai is not the only emirate that has thrown its weight behind blockchain. In 2016, Abu Dhabi Port established Maqta Gateway to help digitise its operations. The entity has since built a new blockchain solution, Silsal, to improve the communication flow among its trade community, and earlier this month it started the first testing with a maritime operator and MSC Mediterranean Shipping Company.
The UAE government, meanwhile, has its own blockchain vision, named the Emirates Blockchain Strategy, which seeks to transform 50% of government transactions into the blockchain platform by 2021. In doing so it expects to save AED11bn in transactions and documents processed routinely, 398 million printed documents annually and 77 million work hours every year.