Citigroup and Barclays Join Experimental Blockchain Project
In recent years, financial institutions have begun to appreciate the perks that come with the blockchain technology. Its anonymity, speed, and security make it highly attractive to banks for use in their day-to-day transactions. Hence, the design of an in-trial platform for banks who wish to capitalize on blockchain technology.
Multinational technology behemoth, IBM, and foreign exchange services firm, CLS, announced the creation of in-trial app store, LedgerConnect, on Monday. This platform is expected to launch in a few months’ time. With LedgerConnect, banks interested in programs based on the blockchain technology can use the platform trial pad.
These financial institutions will be selecting blockchain vendors, including Baton Systems, Copp Clark, Calypso, IBM, SynSwap, and OpenRisk. Theoretically, banks have it easier when they use LegerConncet to opt-in to blockchain projects. These banks can also use the same blockchain protocol, instead of using several incompatible ones.
In a statement made by Ram Komarraju, managing director of technology at CLS, he said:
What is the point of having these people building the same infrastructure? Instead of building several new blockchain applications for the same problem, banks can then focus their energies on their own firm’s operations.
The in-app trial platform is built on the IBM Blockchain Platform and Hyperledger Fabric Technology. It will apply blockchain technology to areas such as anti-money laundering “Know Your Customer” regulations and collateral loan management.
The platform, however, is yet to receive the go-ahead from central banks and the Federal Reserve Bank of New York. Because of its unregulated nature, banks cannot enjoy the potentials that come with using the platform. At the moment, an exact launch date is yet to be given. Vice president of financial markets of IBM, Keith Bear, gives early 2019 as a tentative date. He also hopes more banks would apply before then.
Citigroup and Barclays Sign up for the LedgerConnect Blockchain
Wall Street banks have in recent times, recognized the potentials of the blockchain technology. To solve a litany of problems and improve security, these financial institutions have tested different blockchain technology platforms.
The blockchain technology, which is the underlying technology cryptocurrencies such as Bitcoin, is a secure way to send sensitive information. Its anonymous nature and speed make it very attractive for banks, which deal in personal data and security.
Nine prestigious banks, including Citigroup and Barclays, have decided to key into the LedgerConncet. Citigroup and Barclays have in the past, partnered with different startups to help build projects that address various issues. These issues range from instant transactions to compliance with onerous financial regulations.
Integrating Legacy Systems with Emerging Technologies
The moves made by these banks is commendable, but there is the problem of the old merging with the new.
Vice president of financial markets of IBM, Keith Bear, commented on the old versus new trend. He said:
The challenge is being able to work together across organizations of different speeds. On one side we have a large highly regulated industry. On the other side we have much more agile and fast-footed fintechs with limited resources. Our role is in some respects of mediating those differences in speed and resources.