South African banking giant, NedBank, plans to launch a novel use of smart contracts in the agriculture sector within the next 6-12 months, according to Cobus de Bruyn, Head of Client Value Propositions for Agriculture at NedBank Commercial Banking.
According to De Bruyn, smart contract technology is already being used both internationally and in South Africa, but it is not yet being deployed to the extent that NedBank intends.
“We have the technology available and we’re working round the clock to make this available as soon as possible,” he said.
De Bruyn pointed to the agriculture sector’s numerous processes, including:
- Managing finances
- Accounting
- Production
- Imports and exports, and
- Coordinating with stakeholders like banks and suppliers.
This suits smart contracts, being self-executing digital agreements, that automatically trigger actions when pre-defined conditions are met. This automation simplifies financial transactions by replacing manual processes, reducing the need for human intervention.
“As a result, operational costs are lowered, errors are minimized, and trust is enhanced among parties involved,” De Bruyn said.
He highlighted three specific areas where smart contracts and blockchain could revolutionize agriculture.
“The first is import and export, which involves negotiation, administrative work, and processes and verifications that are cumbersome and, to some extent, expensive,” he said.
“Smart contracts allow these processes and procedures to be automated, shortening the time of the process, while also making it more secure.”
De Bruyn acknowledged that while this technology is new, the opportunities it presents are significant, making it an exciting development for organizations like NedBank.
“Reducing or eliminating manual processes for our clients is what we’re seeking to achieve, but we’re also using the technology to enhance our own systems and processes so that we can truly provide next-level service to the agriculture sector,” said De Bruyn.
“Our agricultural clients want fast processes. They want frictionless, cost-effective solutions. They embrace technology, and we want to provide it to the agricultural community.”
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Regarding the underlying technology, NedBank’s lead architect for information security and blockchain, Adele Jones, said that, in simple terms, blockchain technology creates a network with memory.
“Everybody in the network has a unique address and, from an audit trail perspective, all interactions on the network are covered automatically with the latest innovations in cryptography,” she said.
Jones explained that there are two types of network configurations:
- One is a public blockchain, like the Bitcoin network, where anyone can join, and
- The other is a permissioned blockchain, which restricts access to specific participants.
“Once the network has been established, every participant in the network has a unique address and can implement a vast and versatile array of transactions,” she said.
Jones added that smart contracts are computer code designed to execute within the network ecosystem, automating interactions between participants.
“By codifying agreements and improving the traceability of data on the network, trust is increased, as well as security and transparency among member organisations,” she said.
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