The banks backing the project - Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JPMorgan, State Street, Royal Bank of Scotland and UBS - have paired up with financial innovation startup company R3 to collaborate on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger technology.

R3 CEO and former ICAP Electronic Broking chief David Rutter will lead the project, and more banks are expected to pledge their support in the coming weeks.

“This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system," says Rutter. “Our bank partners recognise the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable.”

He says R3 and its bank partners will establish collaborative joint working groups to share ideas and to test and validate distributed ledger prototypes and protocols.

Kevin Hanley, director of design at Royal Bank of Scotland, says: "Right now you’re seeing significant money and time being spent on exploration of these technologies in a fractured way that lacks the strategic, coordinated vision so critical to timely success. The R3 model is changing the game."

The R3 team is made up of financial industry veterans, technologists, and new tech entrepreneurs, bringing together expertise from electronic financial markets, cryptography and digital currencies. Among the recruits are IBM's blockchain head Richard Brown.

The banks coming onboard are expected to contribute several million dollars to a forthcoming seed fundraising round for the startup.

"These new technologies could transform how financial transactions are recorded, reconciled and reported - all with additional security, lower error rates and significant cost reductions," says Hu Liang, SVP and head of emerging technologies at State Street. "R3 has the people and approach to drive this effort and increase the likelihood of successfully advancing the new technology in the financial industry."