Commerzbank is continuing to drive development of blockchain-based trading solutions – with its latest pilot project focusing on a ‘cash on ledger’ machine-to-machine payment process.
A fully automated payment process between an electric charging point and a Daimler truck system has taken place. For this transaction, Commerzbank issued Euros on a blockchain and provided Daimler Trucks with ‘cash on ledger’ (i.e. the money on the blockchain) to process the payment. Commerzbank is the first German bank to develop a blockchain-based machine-to-machine payment solution.
Increasing connectivity
As a result of digitalisation, machines are increasingly interconnected with each other and operating with rising degrees of autonomy. At the same time, independent communication and machine-to-machine interaction is happening, enabling the settlement of mutual payments. This means that payments in automated contexts will no longer need to be triggered by human intervention. Current payment systems are not yet able to meet these requirements.
“After having completely digitised securities transactions in past pilot projects, the focus is now shifting to DLT-based payment structures, including solutions that focus on machine-to-machine payment. As a bank we see our mandate as creating new digital payment architectures for our clients”, says Stephan Müller, Divisional Board Member Transaction Banking, Commerzbank.
The pilot successfully demonstrated that both charging and subsequent payment processes can be performed fully automatically and without any human interaction. Over the short term this may lead to efficiency gains in logistic chains while also leveraging considerable potential as vehicle automation increases. The solution can also be used profitably for many further user cases in machine-to-machine communication, such as in the chemicals sector, in manufacturing or in the real estate industry.
Driven by customers
Earlier this year, Commerzbank said that its banking blockchain developments are being driven by its customers.
Perhaps predicting the latest pilot with Daimler trucks, Michael Spitz, CEO of the main incubator at Commerzbank’s R&D unit, told us: “Looking at supply chain and trade finance, we are particularly excited about the possibilities of sensors and Internet of Things. We are working with leading medium-sized companies and large corporate clients of Industry 4.0 on the provision of payment solutions for machine to machine transactions. These could be self-driving vehicles at electricity charging stations, for example.”