Nine banks back blockchain collaboration plan

Nine banks back blockchain collaboration plan

Nine of the world's largest banks are backing an initiative to create a set of global standards for the use of distributed ledger technology in financial markets.

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."

Comments: (2)

A Finextra member
A Finextra member 16 September, 2015, 01:31Be the first to give this comment the thumbs up 0 likes

Is 'distributed ledger technology' now the more investor friendly way of saying blockchain? The efforts to shake off the libertarian anarchist ideals of cryptocurrency technology is gaining pace!

A Finextra member
A Finextra member 21 September, 2015, 05:00Be the first to give this comment the thumbs up 0 likes

Mass consumer sentiment and consumer rights will always trump any notion of the ‘libertarian anarchist ideals of cryptocurrency technology’, if crypto-currencies are to become mainstream. There will never be a mass adoption of new technology that is situated in philosophical notions of a free-for-all or anarchy. As we are dealing with people’s money there is no alternative to transparency and accountability. The distributive ledger has this very capacity and it is to be welcomed by all as a means of ensuring people’s property rights.