DBS Bank pilots government grants on blockchain
Singapore’s DBS Bank, the largest bank in Southeast Asia with assets totaling $739 billion, has launched a pilot project that utilizes blockchain technology for the purpose of distributing government grants.
According to a report from Fintech News Singapore, the bank has partnered with Enterprise Singapore (EnterpriseSG) and the Singapore Fintech Association (SFA) to establish the pilot program. The objective is to realize greater efficiency, governance and user experience where programmable grant disbursements are concerned, as a direct consequence of bringing blockchain technology into the equation.
Purpose-bound money
The pilot program relies on the use of a protocol known as purpose-bound money (PBM). A whitepaper relative to PBM was first published in 2023 by the Monetary Authority of Singapore (MAS). In developing the protocol, MAS had collaborated with DBS, alongside Amazon, the International Monetary Fund (IMF), the Bank of Korea, Banca d’Italia and JPMorgan-owned blockchain platform Onyx.
PBM enables the sender of funds to specify certain conditions relative to funds released. This may include such items as validity periods or a set of controls on how funds can be spent by the recipient.
Such conditions can be programmed in through the use of smart contracts. Baking specific parameters in from the outset in turn empowers the distributor to automate disbursements to beneficiaries.
With disbursements automated, the process realizes efficiency gains. Manual oversight can be cut out of the process entirely.
DBS noted a previous program established during the Singapore Fintech Festival in 2023. It involved 27 local fintech firms. Prominent among them were Advance Intelligence, Experian Singapore, Intersystems, Dobin and Aspire. DBS Bank effected such payments over its permissioned blockchain, ensuring that specified recipients received the grants only when specific parameters had been met.
SFA President Shadab Taiyabi commented on the pilot project, stating:
“The solution is designed to streamline business grant disbursements that enables local companies to receive payouts more quickly and efficiently, providing them with additional capital to expand their key business areas.”
Taiyabi added that the SFA will continue to support collaborations between the public and private sectors relative to programmable grant disbursements as Singapore works towards its Smart Nation objectives.
Efficiency gains
Han Kwee Juan, DBS Bank’s country head, emphasized the efficiency gains, stating:
“Smart contract technology automates and streamlines grant disbursements for government agencies to enable faster, more secure disbursements and payments.”
While DBS has progressed this project as a consequence of its collaboration with MAS on PBM, the bank has also been working with the Singaporean regulator on Project Orchid, a project which aims to progress technology and competencies relative to the development of a digital Singaporean dollar. Similarly, it has participated in Project Guardian, an asset tokenization initiative between policymakers and the financial industry.
Earlier this month, DBS entered into a collaboration with Ant International, the international division of the Ant Group which in turn is an affiliate of Chinese e-commerce behemoth, Alibaba, with the aim of providing treasury tokens to improve treasury and liquidity management.
