Atul Bhuchar, Head of Product at Partior, the global unified ledger market infrastructure for clearing and settlement, recently shared his views and insights with Crowdfund Insider.
Partior claims it is redefining the way money moves globally by “optimizing how liquidity is accessed.”
Founded in 2021, Partior is an independent company that reportedly grew from the Project Ubin collaboration backed by the Monetary Authority of Singapore. Its shareholders include Temasek DBS, J.P. Morgan, and Standard Chartered.
By building on the inherent features of its global unified ledger and atomic settlement capabilities, Partior explains that it is “addressing the operating inefficiencies experienced by industry players, including settlement delays, limited transaction transparency and high operating costs, and facilitating the movement of liquidity for financial institutions and their customers.”
Partior’s network interoperates with both digital and non-digital asset and currency networks to provide “a comprehensive suite of real-time, cross-border multi-currency payments, Payments versus Payments (PvP), Delivery versus Payments (DvP) settlements and trade finance functions.”
Our conversation with Atul Bhuchar is shared below.
Crowdfund Insider: Three years have passed since the G20 leaders endorsed the Roadmap for Enhancing Cross-border Payments. How has the industry changed since, and what are some common pain points faced by at the moment?
Atul Bhuchar: As part of the G20 Roadmap for Enhancing Cross-border Payments, the Financial Stability Board (FSB) has established specific quantitative targets at the global level for addressing the challenges of speed, transparency, and access faced by wholesale cross-border payments. The end-2027 deadline provides a six-year period during which the public and private sectors will be working together to implement changes to infrastructures and operations to meet the goals of the roadmap.
In the latest FSB report, it was identified that only 54 percent of wholesale payments go from the originating bank to being credited to end-customer accounts within an hour of the payment initiation. This falls short of the current target of 75 percent — pointing to the fact that significant structural pain points remain unsolved in the cross-border payment process.
These involve high liquidity costs as well as long settlement cycles, due to sequential processing across the multiple intermediaries along the payment chain. Most importantly, the segregation between funds movement and messaging on traditional infrastructures adds layers of complexity to the reconciliation processes, making it more prone to delays and discrepancies, and requiring manual processes for resolution.
Even though domestic instant payment schemes are live across 60+ markets globally, the lack of an end-to-end 24×7 cross-border payments solution is a key gap and this is where Partior comes in. Partior addresses these pain points and brings real-time and programmable capabilities to domestic and cross-border payments, enabling round-the-clock settlement for both commercial bank money (M1) and in the future, central bank money (M0).
Partior does this through its unified ledger market infrastructure, which addresses the challenges of today’s fragmented messaging, settlement, and reconciliation process. Some of the defining features of Partior’s solution include replacing sequential processing in existing payment systems with concurrent processing, simultaneous value-movement and messaging, atomic settlement, and pre-validation to provide 24x7x365 settlement finality and addressing interoperability challenges in cross-border payments.
Crowdfund Insider: How do you see DLT changing the way banks operate? What are some of the key barriers to widespread DLT adoption?
Atul Bhuchar: DLT is redefining the financial market with unified ledger infrastructure that is guided by the technology’s ability to drive transformation for banks, and the way in which they operate and transact in a decentralised and programmable manner. Representing a quantum leap in banking, transactions on DLT are recorded in a decentralised environment that ensures that only authorised participants have real-time access and oversight across the entire value chain, ensuring complete transparency for participants.
This decentralised and programmable framework dismantles existing silos in current state messaging-based market infrastructures, leading to a more streamlined settlement ecosystem. With DLT, each transaction record is decentralised and derived autonomously, enabling a global, real-time, auditable shared source of truth, without dependency on a centralised intermediary.
Despite its many merits, adopting new technology is challenging, particularly when it requires integration with existing legacy infrastructure. As banks better understand DLT, the resources and time for integration with DLT platforms will be significantly reduced over time.
Crowdfund Insider: We are seeing a lot of momentum around programmable payments. How can the industry harness the potential of smart contracts for automated payment processing?
Atul Bhuchar: Programmable payments, facilitated by smart contracts, have the ability to transform the landscape of global payments, global liquidity, and post-trade settlements. Programmable payments, enabled by smart contracts, ensure that payments are executed based on predefined conditions, following the “If This Then That” (IFTTT) principle, enhancing automation and efficiency, reducing manual processing, costs, and risks while boosting automation and transaction efficiency, and translates into a reduction in manual processing and thus, associated costs and risks.
Decentralised programmable networks unlock advanced financial applications, including 24×7 multi-currency real-time clearing and settlement, programmable liquidity management, Just-in-time (JIT) payments, conditional payments, escrows, and innovative money market instruments such as intra-day FX Swaps and intra-day repos and aim to provide 24×7 liquidity solutions for industry participants. These use-cases are still the tip of the iceberg as industry players are now starting to co-create solutions to address systematic pain points.
Central banks, exemplified by projects like the Monetary Authority of Singapore’s new Project Orchid and Project Guardian pilots, explore programmable money applications, signalling a shift from closed, bank-centric systems to an open, innovative, and inclusive financial ecosystem amid a broader industry move towards a digital financial world.
Crowdfund Insider: Considering the rapid advancements of the global financial ecosystem driven in part by new financial innovations such as tokenized assets and digital currencies, how can traditional institutions and networks stay ahead of the curve to unlock the true functionality of these new forms of money?
Atul Bhuchar: The BIS’ “money flower” taxonomy showcases the evolving nature of money and an ecosystem formed of overlapping functionalities and both new and incumbent stakeholders. While newer forms of money like tokenised deposits and CBDCs are expected to reimagine financial markets, traditional institutions are coming to a realisation that embracing new technologies does not equate to a complete overhaul of existing systems but instead, an upgrade to their frameworks so that they can support these newer forms, at scale.
Building on opportunities involving new money and digital asset ecosystem requires the collaboration of all ecosystem partners, and while this may seem like a herculean task, we are already seeing many successful use-cases in motion that can attest to its feasibility — multi-CBDC projects and unified ledgers being key examples. 2023 has shaped up to be a major year in CBDC exploration with a remarkable 130 countries in advanced stages of development. Riding on this momentum, industry partners have embarked on multi-CBDC projects like Project mBridge and Project Dunbar, with collaboration between central banks and commercial banks, to reduce costs, processing times, and reliance on intermediaries for cross-border payments.
As for unified ledgers, platforms like Partior have emerged to transform financial market infrastructures and revolutionise the way financial ecosystem entities transact and collaborate. Traditional market infrastructures are currently siloed in nature, requiring each user to maintain separate records of their assets. This often time results in a multitude of inefficiencies. This has brought about the need for the tokenised asset ecosystem to grow at an unprecedented rate to offer 24×7, programmable payment infrastructures for round-the-clock global settlement of these assets. When integrated into the regulated world of TradFi, these DeFi principles are undoubtedly redefining the global finance landscape.
In this era of emerging digital currencies, banks are dedicating significant resources to understand, assess, and thereafter integrate themselves with these new forms of money. Next-generation networks like Partior are enabling financial institutions to fast-track their digital currency journeys to leverage opportunities in the evolving landscape of new forms of money and to stay ahead of the curve.
Crowdfund Insider: Looking ahead, how do you expect the financial ecosystem to evolve in the foreseeable future?
Atul Bhuchar: The financial industry is undergoing significant changes with the influx of new players, regulations, technologies, and fast-evolving customer demands. Distributed ledger technology solutions will play a more prominent role in enhancing efficiency and transparency in financial transactions and driving innovation.
With recent developments in financial markets, the importance of eliminating settlement risk has significantly increased across the financial industry.
The pain points in different value chains in the financial ecosystem, whether for payments or FX settlements or securities and digital asset settlements, are critical and have significant similarities. Unified ledger solutions which are now coming to life will reduce the inefficiencies across these value chains, eliminate settlement risk, and truly catalyse change and innovation.
The transformation in the shape of money and assets which is currently underway across the financial industry will accelerate from evolutionary to revolutionary, creating exponential growth opportunities for the industry’s early-movers.
