Third-Party Risk Reduction for Banking & Custody

Replace manual, error-prone reconciliation with a single source of truth. Every transaction, from a parts shipment to a royalty payment, is recorded on an immutable ledger. This eliminates disputes over data, slashing audit preparation time by up to 70% and providing regulators with real-time transparency.

• Example: A pharmaceutical company tracks drug shipments end-to-end, automatically proving chain of custody to the FDA without manual paperwork.

Encode regulatory and contractual rules directly into self-executing smart contracts. Payments, transfers, or data releases occur automatically only when pre-defined conditions are met, removing the need for a trusted intermediary to enforce terms.

• Example: In trade finance, a letter of credit automatically pays an exporter upon verified sensor data confirming goods arrival at port, reducing processing from 5-10 days to under 24 hours and eliminating bank processing fees for validation.

Tokenize physical and digital assets—from luxury goods to carbon credits—to create a tamper-proof history of ownership and origin. This allows buyers and partners to verify authenticity directly, crippling counterfeit markets and reducing liability for brands.

• Example: An art dealer uses NFT-based provenance to instantly verify a painting's history, eliminating the need for costly and slow third-party authentication services, while providing the buyer with a permanent digital certificate.

Move away from centralized identity providers. Users and businesses control their own verifiable credentials (e.g., business licenses, KYC data) and share them peer-to-peer with cryptographic proof. This reduces data breach risk at intermediaries and streamlines onboarding.

• Example: A new supplier can instantly prove its corporate registration and compliance certifications to a manufacturer using a shared, cryptographically signed credential, bypassing weeks of manual document checks by a third-party vetting service.

Enable atomic settlements where asset transfer and payment are a single, irreversible event. This eliminates the days of exposure between trade execution and final settlement (settlement risk) and the risk that a counterparty defaults on their obligation.

• Example: In securities trading, a Delivery vs. Payment (DvP) model on a blockchain ensures the stock and cash swap simultaneously. This can reduce capital reserves held against counterparty risk by billions across the financial system.

Create a permissioned blockchain network with competitors or partners to share critical operational data (e.g., inventory levels, logistics status) without ceding control to a single, potentially biased third-party platform. All members operate from the same synchronized data set.

• Example: Competing airlines in an alliance share real-time maintenance logs and parts inventory on a shared ledger, optimizing fleet management and reducing grounding times without relying on an external software vendor that controls and monetizes their data.

The Pain Point: Service Level Agreements (SLAs) with third-party vendors are paper-based and enforced through manual reviews and disputes, leading to delayed penalties and unresolved performance issues.

The Blockchain Fix: Smart contracts codify SLA terms (e.g., uptime, delivery time). They automatically verify performance data from oracles (IoT sensors, APIs) and execute penalties or incentives autonomously and transparently.

Real-World Impact: A logistics company implemented smart contracts for carrier SLAs, automating on-time delivery bonuses and late penalties. This reduced billing disputes by 90% and improved carrier performance by aligning incentives programmatically.

The Pain Point: During an audit or investigation, compiling a complete, trustworthy record of third-party interactions is a monumental, error-prone task that consumes hundreds of hours.

The Blockchain Fix: Every interaction, approval, and data exchange with a third party is immutably logged on a shared ledger. Regulators can be granted permissioned access to a verifiable, chronological history that cannot be altered retroactively.

Real-World Impact: Financial institutions using blockchain for trade finance report cutting audit preparation time by over 50%, as the required evidence is pre-verified and readily accessible on the distributed ledger.

The Pain Point: Managing vendor access to internal systems (portals, APIs) involves fragile, centralized credential systems vulnerable to breaches and difficult to revoke promptly.

The Blockchain Fix: Vendors hold their own verifiable credentials (Decentralized Identifiers). Your systems request and verify these credentials on-demand via the blockchain, enabling zero-trust, fine-grained access control that can be revoked instantly.

Real-World Impact: This model eliminates the risk of stolen vendor passwords and simplifies compliance with frameworks like NIST and SOC 2. It reduces IT helpdesk tickets for access management by an estimated 40-60%.

Transitioning from a manual, trust-based model to a blockchain-verified system delivers measurable financial and operational returns:

• Cost Reduction: Slash third-party due diligence and audit preparation costs by 60-80% through automation and elimination of redundant processes.
• Speed: Reduce vendor onboarding and credential verification from weeks to minutes, accelerating time-to-revenue for new partnerships.
• Risk Mitigation: Near-eliminate fraud and compliance fines by replacing error-prone paperwork with cryptographic proof and immutable records.
• Strategic Value: Transform compliance from a cost center into a competitive differentiator through superior transparency and trust.

Mitigate counterparty risk in large transactions with programmable escrow. Funds are locked in a smart contract and released only upon verified delivery or milestone completion.

• Example: International trade platforms use escrow smart contracts to secure goods-in-transit payments.
• ROI: Reduces payment disputes and eliminates escrow agent fees, securing transactions without a trusted intermediary.

Combat greenwashing with immutable ESG reporting. Track carbon credits, renewable energy certificates, and supply chain emissions on a public ledger to provide investors and regulators with verifiable proof.

• Example: The Verra registry explores blockchain to prevent double-counting of carbon offsets.
• ROI: Enhances brand trust, meets stringent disclosure mandates (e.g., CSRD), and unlocks green financing.