2. Oracle FLEXCUBE Blockchain Adapter
Oracle FLEXCUBE Blockchain Adapter enables FLEXCUBE to interface to
blockchain systems facilitating easy transformation of information between
traditional applications and blockchain datasets. You can use this adapter
with any version of FLEXCUBE and information to be transformed can be
configured at the Module level of FLEXCUBE. Blockchain transactions,
generated from or impacting the core banking system, can be queried and
viewed from FLEXCUBE itself. The adapter allows transformation and processing
of information, between FLEXCUBE and blockchain systems, with minimal
human intervention thereby improving process efficiency, reducing risks
and enhancing straight through processing. The adapter can be used not
only to interface FLEXCUBE to blockchain systems but also any other similar
third party applications to interface to blockchain systems.
A blockchain is an append only distributed data store/log, in a peer
to peer network, where un-trusted parties come to a consensus on the
order of data sets (financial or non-financial data), based on previously
agreed upon rules. Block chains can be classified, as public or private
and permissioned or unpermissioned, based on the read and write access
respectively allowed to the participating entities. Block chains allow
an immutable record of transaction log, when multiple parties need shared
control of data, without the need to depend on a central trusted authority.
Smart contracts allow business logic to be triggered and processed based
on pre-defined events mutually agreed upon by the contracting parties.
This chapter contains the following sections:
Oracle FLEXCUBE Blockchain technology
allows you to:
- automate loan creation
- automate liquidation of bills under LC
- automate liquidation of loan contract
- reduce SWIFT message cost
- maintain single contract which will be operated by all the parties
- transmit real time data across smart contracts allowing simplified
and efficient auditing process
The following are the prerequisites for the interface:
- Set up Oracle FLEXCUBE Universal Banking Application
- Set up Blockchain Network
- Set up Weblogic server to deploy FLEXCUBE Blockchain adaptor
Refer the ‘Oracle FLEXCUBE Universal Banking Installation’
manual to set up Oracle FLEXCUBE Universal Banking Application.
2.3 Integration Architecture
The following diagram provides information on technical architecture
for Oracle’s Blockchain based solution:
2.4 Integration Process
In this section we will take a use case to describe
Oracle FLEXCUBE Blockchain technology.
This section contains the following topics:
2.4.1 Business Process Workflow for Buyer’s Credit
The following image represents the overall task flow using blockchain
for liquidation of import bill under LC using Buyer’s Credit :
image represents the loan repayment task flow:
2.4.2 Detailed Use Case for Buyer’s Credit Solution
This section describes buyer’s credit solution using blockchain
with a Use Case where Bank A is the Importer's Bank and Buyer's Credit
is offered by Bank B or C at a different country. The requirement starts
from the stage when Bank A which had received quote for Buyer's Credit
and is accepting the offer from either Bank B or C for an Import Bill
under LC received by them.
220.127.116.11 Importer’s Bank Accepting
Buyer’s Credit Offer
When the Importer's Bank (Bank A) accepts the offer for Buyer's Credit
provided by Bank B/C, the Importer's Bank creates a dummy Import Bill
which will have all the data of original Bill under LC like Shipment
details and Goods details. In addition to these data, the Bill contract
captures the following important details:
- Lending Institution (Bank B/C) as the Drawer in the Bill with Name
- The Offer/Quote Reference Number.
- The amount (Buyer's Credit Bill Currency Amount should be the same
as the Loan Amount).
- The offer rate and the spread (This has to be configured in the Bill
as Interest rate to be charged so that during liquidation interest is
automatically calculated and remitted to the Lending Institution at the
same rate as the loan).
- Charges (This has to be configured as charges in the Buyer's Credit
- Date of disbursement for the loan.
- Value date of Loan disbursement (This should be captured in such
a way that on receipt of funds the Bill under LC is liquidated on due
date. This should also be taken into account for interest calculation
on the Buyer's Credit Bill Contract).
- Maturity date for the loan (The tenor of the loan with maturity date
should coincide with the maturity date of Buyer's Credit Bill Contract).
18.104.22.168 Authorization of Buyer’s
Credit Bill Contract
The following actions will be performed by default if Buyer's Credit
Bill Contract in Bank A is authorized:
- The data will be passed on to the blockchain network for validation and creation of Smart Contract.
- The smart contract will be notified to Bank B/C by the blockchain
network. The receiver will be identified based on the Lending Institution
data captured in the Buyer's Credit Bill Contract.
- The smart contract will have a status to identify that the offer
is accepted and is awaiting Loan creation/disbursement.
22.214.171.124 Receiving Data at Lending Bank
Bank B/C is notified about the smart contract through the blockchain
network. When the notification is received:
- A loan contract will be created automatically
- The loan contract will be in unauthorized state.
- User has to identify pending loan contract authorization through
query and authorize it.
- On authorization of loan contract, MT 202 will be generated and sent
to Nostro Correspondent. The loan reference number will be updated in
the Smart Contract and status will be updated to identify that the loan
disbursement is made.
- When the loan is authorized in Bank B/C and the status is updated
in Smart Contract as Loan Disbursed, a notification is sent to Bank A
(Importer's Bank) through the blockchain network.
- The loan disbursement details will be sent to Bank A (Importer's
Bank) through Blockchain.
126.96.36.199 Processing on Receipt of Loan
- At Bank A, a facility is required to see the list of Buyer's Credit
loans disbursed and pending approval.
- A query facility is provided to filter based on Currency, Importer
and Value Date apart from the Buyer's credit reference number and the
blockchain smart contract reference number.
- Once the user verifies the Pass-sheet credit, the user will have
facility to select the records for further processing and submission.
- On submission of selected records, system generates a FT contract
for the amount. Nostro Account will be debited and an Intermediary GL
will be credited.
- The FT contract will hold the details of Loan reference of Bank B/C
and the Original Bill under LC reference.
- Immediately after creation of FT, system automatically triggers the
liquidation of the original Import Bill under LC.
- The status in the Smart Contract will be updated to denote that the
disbursed funds have been applied/utilized.
188.8.131.52 Liquidating Buyer’s Credit
System will send a reminder to the importer for repayment of Buyer's
Credit loan two days before the due date.
- On the due date for liquidation, user will have to liquidate the
Buyer's Credit import bill
- On authorization of the Import Bill system will update the Smart
Contract in blockchain to indicate that the Importer has remitted funds
for repayment of Buyer's Credit loan.
- Blockchain will trigger a notification to Lending Bank regarding
the repayment of the loan by the Borrowing Bank.
184.108.40.206 Data Receipt at Lending Bank
Once the liquidation of Buyer's Credit contract is authorized in Bank
A and status in blockchain, Smart Contract is updated as repayment,
a message will be triggered to Bank B/C through blockchain.
- A query screen will be available in Bank B/C to query the transactions
for which remittance is made by Importer and loan is yet to be liquidated.
- Once the user gets a confirmation that nostro account is credited
(either by way of MT910/940/950), the user will select the records from
the query screen for liquidation and submit it.
- On submission system will trigger liquidation of the loan.
- Once the loan is liquidated, system will send a message to the blockchain
network to update the status of smart contract to 'Closed’.
- Post validation of the request from the Lending Bank, the blockchain
network updates the status of the smart contract to ‘Closed’
and sends a notification to Bank A.