OCBC Bank has partnered with the Land Transport Authority of Singapore (LTA) to pilot a new blockchain payments solution for construction projects.
This innovative system aims to streamline the disbursement of mobilisation advance payments to contractors, enhancing efficiency and transparency.
These payments, often amounting to millions, help defray heavy upfront capital outlays for contractors at the start of projects.
The new solution, integrated into OCBC‘s business banking platform, allows LTA to digitally manage and track these significant upfront payments.
LTA gains full transparency over the use of these funds, with a real-time overview of transactions and bank balances.
By automating the process through smart contracts, payments are automatically released to contractors once pre-defined conditions are met.
This not only accelerates the payment process but also provides LTA with real-time visibility into how these funds are utilised.
The pilot programme, which involves three major contractors working on the Cross Island Line projects, has already disbursed over S$22 million to main and sub-contractors.
This initiative builds on OCBC’s participation in Project Orchid, a Monetary Authority of Singapore initiative to develop infrastructure for a digital Singapore dollar.
Melvyn Low, Head of Global Transaction Banking, OCBC, said,
“We are excited to embark with LTA on this journey of transforming the way payments are handled in the construction industry. This blockchain-based conditional payment solution will improve the governance and transparency of utilisation of the mobilisation advance payments that LTA extends to its contractors.
There is much more that can be done in this area. In the spirit of our commitment to helping people and communities achieve their aspirations, we look forward to developing more such solutions in future to help our customers transform their businesses and reduce reliance on manual processes.”
Featured image credit: Edited from Freepik
