Chatsworth leads global PR support for enterprise blockchain software firm R3 since its launch.
“There’s also a very special case of cross-blockchain interoperability… the case where the networks at each end of the connection turn out to be running the same platform. Intrachain, if you like.”
Richard Brown is Chief Technology Officer at R3, the enterprise software company supported by hundreds of banks, technology firms, regulators, trade associations and professional services firms. His team builds Corda, the world’s most advanced enterprise blockchain platform. What he doesn’t know about blockchain technology isn’t worth knowing.
Richard has long argued that not all blockchain platforms are alike and that the promise of blockchain technology is real with solutions which can eliminate huge amounts of cost, redundancy, error and needless reconciliation across entire business ecosystems, as well as opening up previously hidden new revenue opportunities.
But not all blockchain platforms are alike: Only some designs will be architecturally suited to the challenge. In his latest thought piece for Forbes, Richard takes his original five ingredients for interoperability and expands them to some real-life, tangible examples including the home buying process.
Read the full article here. As a reminder, here Richard’s five ingredients of blockchain:
- We need integration with existing systems
- We need to be able to initiate transactions on other networks
- We need to be able to transact interchain with solutions on other technologies
- We need to be able to transact intrachain with solutions on different deployments of the same technology
- And we need to reduce buyer’s remorse by making it easy to interchange one underlying platform for another
Today, a new independent global network to digitise and modernise the USD 18 trillion trade finance market has been launched under the new brand – Contour.
The launch follows a series of ground-breaking live pilots in 14 countries and a global trial with more than 50 banks and corporates, which reduced processing times for Letters of Credit by over 90%, from 5-10 days to under 24 hours.
Contour now moves into full commercialisation of its offering and has established itself in Singapore as a fully independent network and is inviting banks and corporates to join its beta network.
Contour is built on R3’s Corda blockchain and retains the support and expertise of the R3 team. It is led by Carl Wegner, a trade finance veteran who joins following a successful tenure building R3’s presence across Asia.
The network is focusing initially on Letters of Credit (LoCs), which are issued between banks, typically across country borders. They serve as a guarantee for payments between two companies or entities who want to trade goods or services with each other.
The 400-year-old process for agreeing, issuing and tracking LoCs is largely manual, inefficient and costly. Each party must keep and verifying its own separate paper records, creating duplication and discrepancies. Contour digitises LoCs on blockchain, helping banks and corporates save time and money by reducing old fashioned, duplicative processes.
While historically recognised as an excellent risk-mitigation mechanism, research by Contour reveals that 86% of participants consider traditional LoCs as over-reliant on paper, takes too long and is becoming ‘intolerable’ for both corporates and banks.
Carl Wegner, CEO, Contour said: “The opportunity cost in trade finance is huge. Trillions of dollars in commodities, products and services are transacted daily, but the sector is still characterised by slow, duplicative and expensive processes. Contour delivers a network where trusted information is shared in real-time, effectively digitising Letters of Credit across all users in the transaction.
“We are indebted to the community of banks and corporates who have collaborated with us to validate our solution which delivers genuine, measurable value as well as process improvement around Letters of Credit. With the launch, Contour is now available to provide a full commercial service to organisations looking to enhance their trade finance practices.
“We are now focusing on scaling the network with more banks, corporates and partners, and look forward to continuing to collaborate with our growing community.”
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Great to see David E. Rutter, founder and CEO of R3, on CNBC’s Squawk Box this week, discussing his predictions for blockchain in 2020 and beyond.
For more information about some of the great work we do for our clients, click here: https://www.chatsworthcommunications.com/work/
- R3 momentum increases as ecosystem swells to over 350 firms
- Annual conference attracts over 1,100 attendees
- CEO predicts traditional business models and technology must change or face extinction
Traditional business models remain under threat across the full value chain as enterprise blockchain continues to gain momentum, according to R3 CEO & Founder, David E Rutter
His comments came during R3’s annual CordaCon event, attended by over 1,100 developers, business leaders and industry experts in the heart of London’s financial district. The event drew a significant increase on previous years.
Since inception four years ago, R3 has risen to become a key player in blockchain-inspired technology to enhance a range of business processes including trade finance, insurance and financial services. R3’s global blockchain ecosystem has now grown to over 350 companies.
Among the announcements at CordaCon included a strategic partnership with Accenture and SAP, for R3’s Corda platform to enable two of the tech industry’s major players to provide a real-time gross settlement token-based exchange, with instantaneous settlements to reduce friction throughout the transaction chain.
Mr Rutter added: “Traditional business models are under threat across the full value chain. We will see the continued convergence of traditional Financial Market Infrastructure and broker businesses such as SIX, NY Stock Exchange, and Nasdaq with the crypto exchange world, such as Coinbase and Binance. We’ll also see new players emerge and the nimblest will win.”
Many of R3’s early adopters were at the event to talk about the work they are doing on Corda—such as TradeIX with Marco Polo, CryptoBLK with project Voltron, The Institutes Risk Alliance, SDX, B3i and ABI Lab to name a few.
Mr Rutter is a financial services veteran, having served as CEO of ICAP’s electronic broking division, before forming R3 and US treasuries platform LiquidityEdge, in the process of being acquired by MarketAxess in a USD 150 million deal
Mr Rutter added: “Corda’s longer term product strategy includes delivering capability on settlement and value transfer because we fundamentally believe we are embarking upon the beginning of a ‘tokenization of everything’ era. Digital Assets or tokens will reimagine how value is moved and managed and will fundamentally change the nature of business.
“Security tokens are squarely now under the purview of the regulators and will fall under global securities regulation. I believe long-term success and sustainability of tokens must rely on compliance with key principles pushed by the maturing regulatory framework. We will need a strong, well balanced ecosystem, regulatory framework, innovative mindset, and know-how from existing market infrastructure, as well as the right enterprise technology.
“We expect to see further enterprise blockchain consolidation. A year or two ago there were dozens maybe more platforms aspiring to be enterprise blockchains and we are already down to two real contenders in Corda and Fabric, with many other still trying to make Ethereum work at scale with proper privacy protections.
“On Interoperability, as applications go into production the need for seamless interoperability becomes more evident, so the surviving platforms need a rock solid interoperability story. I believe what we call “business network operators” the solution providers and of course their customers know that there won’t be just one solution for say Trade Finance so being able to send obligations to other customers on other BNO becomes an absolute necessity.
“The second order of this would be interoperability between blockchains and I think I was first asked about this over four years ago and the story for me is the same. While I think that may be important over a longer time frame it’s not a next year crucial deliverable. And for us anyway we are just looking to further solidify our interoperability story and I am pleased we have been focused on this for some time now.”
Blockchain-based post-trade processing network Cobalt has gone live with Deutsche Bank, XTX Markets and Saxo Bank.
Cobalt is among a clutch of firms bidding to use shared ledger technology to drive down reconcilliation costs and improve operations in the post-trade space. The firm’s platform, set up by by currency trading veterans Andy Coyne and Adrian Patten, delivers a private peer-to-peer network that aims to slash back office costs in FX markets by providing a single, shared view of a transaction to trading counterparties.
By creating a single, standardised view of each transaction, users can manage services such as aggregation and netting via a single platform, thereby reducing duplication and position exposures. From analysis using executed trade data, Cobalt claims to have been able to provide clients over 50% in cost savings across the FX lifecycle.
Russell LaScala, Co-head of Global FX at Deutsche Bank said: “The two biggest business issues banks face today are managing risk and the scaling of their business with the rise of smaller tickets. Cobalt’s solution ensures we can reduce operational risks associated with legacy systems and slash the cost of processing tickets for our entire FX business using a single platform.”
There are currently 20 beta participants waiting to onboard the network, including Citadel Securities and Citi, which became a Cobalt investor in 2016.
Payments giant Mastercard is to develop a blockchain-powered cross-border payments platform in partnership with enterprise-focused blockchain firm R3.
In an announcement on Wednesday, Mastercard said the two firms have inked a deal to “develop and pilot” the payments solution. It will initially be aimed at connecting faster payments schemes and banks backed by Mastercard’s clearing and settlement network.
The platform will be built on Corda Enterprise, the commercial version of the platform, as opposed to the open-source Corda Network, R3 told CoinDesk.
The partnership is planned to merge R3’s expertise at developing blockchain solutions with Mastercard’s existing payment systems and network. Ultimately, the firms hope the new platform will help tackle industry issues such as costly payments processing, liquidity management and a paucity of standardization and connectivity between banks and domestic clearing systems.
R3 CEO David E. Rutter said:
“All institutions – large or small – rely on the ability to send and receive payments, but all too often the technology they rely upon is cumbersome and expensive. Cross-border payments can be a particular pain point. Corda was designed specifically for enterprise use cases such as this, and we look forward supporting Mastercard in bringing blockchain-enabled payments businesses across the globe.”
Citing its July acquisition of international payments firm Transfast as a boost to its network, Mastercard said the deal to utilize Corda Enterprise will further expand its capabilities in the payments arena.
The news of the partnership also comes just days after Mastercard joined the Marco Polo trade finance blockchain network founded by R3 and TradeIX.
Peter Klein, executive vice president of new payment platforms at Mastercard, said in the announcement:
“Developing a new and better cross-border B2B payments solution by improving worldwide connectivity in the account-to-account space is central to Mastercard’s ambition. Our goal is to deliver global payment infrastructure choice and connectivity as demonstrated through our recent strategic acquisitions and partnerships, including our relationship with R3.”
FXCM announced today that it has expanded its cryptocurrency offering with the addition of Bitcoin Cash and Ripple.
Since launching crypto CFDs in 2018, FXCM has seen rising demand from retail clients seeking to expand and add new cryptocurrencies to their portfolios.
Bitcoin Cash is borne from Bitcoin but has the capacity to process more transactions due to a larger block size. Ripple tokens, known as XRP, have also become increasingly popular with retail investors.
By trading these cryptocurrencies as CFDs, FXCM traders have the incentive potential opportunity to go both long and short. Micronized CFD contracts allow clients to place trades in fractions, which lowers the minimum margin required to enter a position. In addition, profits are credited to a trader’s account instantly, rather than held in a crypto wallet or cold storage.
Brendan Callan, CEO of FXCM Group, comments: “Having successfully launched three different cryptocurrencies in the past 12 months, our clients are asking us to improve the range of crypto CFDs they can access. The addition of Bitcoin Cash and Ripple marks the latest stage of growth for FXCM’s burgeoning cryptocurrency offering and is in direct response to increased demand from our clients.”
Cobalt, the foreign exchange (FX) infrastructure based on shared ledger and high performance technology, has hired five experienced professionals to lead its drive to re-engineer the FX market.
Post-trade FX is currently riddled with complex legacy systems and manual processes, creating unnecessary cost and risk across the market. The new hires bring a wealth of FX experience to the company and will play an important role in the rollout of Cobalt’s shared infrastructure which optimises risk management and slashes cost by up to 80%.
Bob Linton, based in New York, has become head of connectivity and onboarding at Cobalt. He will be responsible for replacing old, legacy technology incumbent in many institutions’ post-trade FX operations with Cobalt’s low latency, high performance shared ledger technology. He joins following a 13-year stint at market infrastructure technology provider, Traiana.
Dan Evans was appointed product analytics lead and is focused on product innovation and reporting as well as highlighting the hidden opportunities for financial institutions. Dan is experienced in analysing FX trading data both as a director of FX trading at UBS, where he spent seven years, and as the director of his own consultancy.
John Fitzgerald joins as information security manager. John has over 15 years in risk and security management and prior to joining Cobalt, he was the lead for information security at Rathbone Brothers Plc.
Nitin Talway has been appointed head of support. He has over 13 years’ experience in the FX industry having previously worked for institutions including Bank of America Merrill Lynch, RBS/Natwest Markets and Credit Suisse.
Kameldeep Bhachu is now a senior business analyst at Cobalt. He previously worked at Murex and in the FX and treasury divisions at Morgan Stanley, UBS and Royal Bank of Canada. He brings extensive front to back knowledge of the FX cash and derivatives business.
Darren Coote, managing director of Cobalt, commented: “We are thrilled to welcome Bob, Dan, John, Nitin and Kameldeep to the rapidly expanding Cobalt team. They bring a breadth of FX experience across the interdealer and prime broker space and have an intimate knowledge of the competitive landscape as well as financial institutions’ systems. Each will play a key role in reengineering the FX market from the ground up, getting rid of legacy systems and replacing them with new technology which is more suitable for the low-latency FX market of today.”
Over the past couple of years, insurers have migrated away from their conservative image, leveraging several emerging technologies, including blockchain, to re-think their current business models. One of the most significant technologies leading this digital transformation, blockchain is streamlining back-office processes and systems – and heading into 2019, insurers are accelerating their deployment of the most innovative use cases of enterprise blockchain technology yet.
Laying the back-office building blocks
Insurance companies face a complex web of challenges in today’s market. Regulatory demands are piling up, fraudulent claims are commonplace, and the flow of data is ever increasing. Meanwhile, as digital technology permeates the financial services industry more broadly, customers expect a greater level of innovation than ever before.
Despite the growing demand for tailored products and services, insurers recognized that for transformation to be sustainable, it must begin in the back office. Legacy systems combined with patchwork solutions have perpetuated a closed-off information environment with data silos and resulting operational inefficiencies. Building customer-facing digital solutions on these crumbling foundations would have disastrous consequences.
That is why, over the past two years, insurers have been hard at work behind the scenes deploying cutting-edge enterprise blockchain platforms to overhaul and modernise their back offices. Integrating even just the foundational technology can have a huge impact on a company’s transparency, stability, and efficiency.
By taking the first step of moving its transactions onto a shared ledger, an insurer can potentially eliminate fraudulent and duplicate claims by logging each transaction in a decentralised repository. Instantly, an insurance company is able to verify the authenticity of a customer, policy or claim. This is a simple premise but a huge step forward for the industry.
In addition, with the rise of the Internet of Things (IoT) and connected devices, blockchain provides an efficient and secure way to manage, share and leverage an ever-growing amount of data. Purpose-built enterprise blockchain platforms like Corda overcome the challenges of traditional public blockchains by ensuring sensitive data is only shared with parties that have a need to see it in each instance.
The potential efficiency gains for both the insurer and the insured are dramatic. Consider, for example, a reinsurer, insurer, and broker consolidating their policy data and storing it on a blockchain – the underwriting and application process could be reduced from weeks or even months to near real-time, with no burden on each entity having to gather, reconcile and submit documents.
These core benefits of blockchain technology are now being realised across the global insurance industry, with forward-thinking initiatives such as the RiskBlock Alliance and [ITIC Geneva 2018 contributors] B3i leveraging the power of collaboration to drive adoption and deployment.
By moving to a model in which disparate parties such as insurers, reinsurers and brokers can share and store policy information in a cryptographically secure way, the industry has laid the foundations for the next phase of blockchain-enabled innovation.
A convergence of technologies
Insurers are acutely aware of the need to evolve in order to stay competitive, and streamlining market operations with blockchain technology is freeing up precious capital and resources previously spent on auditing and administrative costs.
Newly created roles such as chief digital officer and chief innovation officer are now commonplace across the industry, with firms vying to increase their market share by developing solutions that meet customers’ demands for innovation while increasing efficiency and profitability. Once data has been migrated to a blockchain platform, the potential to apply other technologies such as artificial intelligence (AI) to utilise this immutable, real-time information is vast.
Dynamic pricing is an example of an emerging blockchain-enabled innovation that benefits both the insurer and the customer, with broad-ranging potential across health insurance, car insurance, property insurance and beyond.
Taking the case of shipping insurance, advances in technologies such as AI and telematics enable insurers to access detailed, real-time information about a ship’s location, age, and condition. This means that if a ship enters pirate waters, its location data can automatically be updated on the blockchain and the insurer can make the necessary adjustments to its risk profile and policy pricing. The same applies to the inverse scenario – for example, if a ship is young, in good condition and doesn’t stray from safe waters. Now consider that the ship is transporting refrigerated cargo, which is also insured. How does an insurer know whether a temperature spike is taking place in a crate at sea a thousand miles from its destination that could potentially destroy the cargo? Thanks to telematics, sensors in the cargo containers can communicate accurate information about temperature, humidity, and atmosphere. This information can be updated in a smart contract on a blockchain platform in real time, enabling an automatic pay-out to the customer if the cargo is spoiled by high or low temperatures. This saves the insurance company time and money while providing the customer with a better experience.
Dynamic pricing also has huge potential in the health insurance space. Health insurers require a vast amount of information about a customer’s medical history and lifestyle in order to piece together a policy, and provision of false or inaccurate information is commonplace. Blockchain enables insurers to accumulate data from multiple verified sources with updates occurring in real time, allowing them to carry out more frequent risk assessments and customise pricing accordingly.
Usage-based insurance (UBI) is another innovation currently reshaping the car insurance industry. Many cars now come equipped with connected features or advanced driver-assisted systems, which are having a profound impact on the way auto insurers handle policies.
Traditionally, car insurance policies have been based on driver characteristics like age, personal information and accident history. With UBI, insurers are able to incorporate driving behaviour data such as speed and hard braking that is updated in real time on the blockchain. In addition, telematics technology in the car can measure the time a driver spends on the road each day, opening up opportunities for pay-as-you-drive insurance policies that incorporate this data into a smart contract.
A digital future
These developments would be innovative in any sector, but when you consider that the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic.
By harnessing the potential of blockchain to tackle back-office challenges head-on, insurers have made the necessary investment to position themselves to take advantage of the myriad of opportunities and further efficiencies that blockchain – and its convergence with other new technologies – will deliver over the coming years.
Cobalt, the foreign exchange (FX) post-trade processing network based on shared infrastructure and high performance technology, has appointed FX specialist Anoushka Rayner as global head of sales and business development.
Anoushka brings over 20 years of experience in the FX industry to Cobalt. She has held a number of high-profile roles, most recently as business manager and global FX sales specialist at Traiana. Prior to this she worked as sales director at smartTrade Technologies and as global head of FX option sales at FXCMPro, the institutional arm of Forex Capital Markets.
Anoushka will be responsible for managing Cobalt’s commercial relationships and will play a key role in scaling up the business as it gets ready for its launch later this year.
Darren Coote, Managing Director of Cobalt, commented: “We are very pleased to welcome Anoushka to our ranks as we work towards reengineering the largest and most liquid financial market in the world. She brings a wealth of experience and contacts to Cobalt and is a key part of our plans as we prepare to launch later this year.”
Anoushka Rayner said: “Current post-trade FX service providers and infrastructure are shackled by legacy technology and inefficient processes which are unfit for purpose. This increases costs for market participants and poses significant operational and systemic risk to the FX market.
“I’m excited to be working for Cobalt as I believe it poses the single biggest innovation to post-trade FX in the last 15 years and look forward to playing my part in creating a shared infrastructure which will benefit the entire market.”
Away from the mania of last year’s ICO gold-rush, the appeal and benefits of raising capital by issuing debt and equity on a blockchain-enabled marketplace has struck a chord in the institutional financial services world. As momentum builds among some of the biggest names in finance, we will soon see properly regulated tokens, fit for real businesses and sovereign entities, writes R3’s Todd McDonald.
2017 saw a huge boom in companies raising money by issuing their own digital currencies, a process that has become known as an initial coin offering, or ICO. Holders of these coins or ‘tokens’ are then able to freely trade them on online crypto exchanges.
ICO activity skyrocketed almost overnight, and by the end of 2017 start-ups had managed to raise a total of more than $5.6 billion. Not bad for a market that barely existed a year earlier.
The potential for quick returns attracted a lot of investors, especially inexperienced retail investors spurred on by stories of crypto-millionaires. As might be expected, the risks associated with these investments were not always fully understood. There have been countless instances of scams, fraud or outright Ponzi schemes, which would be seen as comical except for the fact that it put ‘other people’s money’ clearly at risk.
Unsurprisingly, the amount of money pouring into the sector means regulators are appropriately increasing focus on token issuance projects, particularly in the United States. This, combined with a steep decline in deployable money from cryptocurrency speculation, has led to a clear cooling off period for ICOs.
However, the benefits of a decentralized issuance and transaction marketplace and smart securities contracts have clearly captured the attention of institutional players. 2018 has seen increased focus on security tokens, which offer the promise of spurring a new, lower friction method of asset and capital formation. These ‘enterprise-ready tokens,’ if developed appropriately, could automate or simplify much of the asset origination, issuance, execution, and secondary trading processes that makeup so much of investment banking fees today. Issuers of securities everywhere see the value in a more efficient, effective connection to those looking to allocate capital, all in a safe, regulated and automated environment.
If bitcoin represented the first blockchain revolution and the emergence of enterprise blockchain platforms represented the second, the creation of a new global capital market powered by enterprise security tokens will usher in the third.
Putting assets on the chain
The first instances of these new enterprise token will likely focus on what is called asset-backed tokens. Put simply, the digital token represents an asset that is held ‘somewhere else,’ often at a regulated custodian. The token acts as a ‘digital twin’ and can be traded or exchanged freely on a blockchain with settlement finality, while the underlying asset remains blissfully in place at a custodian.
This interplay of a regulated custodian linked with an on-chain digital representation, while seemingly straightforward, unlocks new ways for markets to transact and expand. It offers a way for businesses to begin to iterate and implement enterprise-friendly yet novel digital assets, all from a strong foundation of an accepted regulatory base.
Building the token ‘buy-side community’
Both emerging and established financial infrastructure players are currently developing solutions to enable the issuance and secondary trading of these asset-backed tokens.
If tokens are to become credible and useful instruments in the institutional world, the quality and type of investor they are able to attract must also be considered. For example, when companies embark on a capital raise, whether it is a Reg D placement or full blown IPO, they (and their investment bank partners) seek ‘strong-hand’ investors – those that aren’t in it just for a quick profit.
The same will apply in the future for companies issuing their debt or equity as tokens, and as such, they will seek out platforms that give them access and distribution to a buy-side of proven investors.
Corda: the natural home of security tokens
R3 is uniquely positioned to facilitate the emerging ‘token economy’ in a secure and regulated manner. The same enterprise-ready focus that led to the design and capabilities of our Corda platform can be extended to bringing the best innovations of the ‘wild west’ of the token world to the enterprise.
Corda was designed from inception to solve the problem of how to represent real-world agreements on a blockchain in a canonical and enforceable way, and this approach can be directly applied to security token issuance. Financial agreements on Corda take the form of smart contracts, linking business logic and data to associated legal prose in order to ensure that trades executed on the platform are rooted firmly in law.
Other key considerations for security token issuance, such as identity, security, data privacy, and settlement finality, are already handled elegantly by Corda and have been key drivers in securing its position as the blockchain platform of choice in capital markets.
Corda-based token examples actually emerged back in 2016, when we began a collaboration with Bank of Canada, Payments Canada and others under the name Project Jasper, where a token called CAD-COIN represented collateral held by the central bank. Since then, we have seen pilot and production examples from our partners, in particular from HQLAxin securities lending and Tradewind Markets in gold trading.
Connectivity with the established financial services community also differentiates Corda from any other platform in the space. R3 is already in talks with a number of major market infrastructure providers about creating regulated environments for security tokens, underpinned by Corda, and the 200+ member ecosystem includes most of the biggest names in financial services, giving token issuers access to a vast network of high-quality investors. Corporates, banks, asset managers, and market infrastructure providers are also crowding in to provide a stable, regulated settlement asset on Corda. Corda’s unique design supports delivery of digital security tokens against payment in digital cash instruments in a single, atomic transaction. This will reduce time, cost, and perhaps most importantly, risk in the emerging token-enabled credit market on Corda.
Platforms like Corda provide the catalyst and foundation to enable security tokens to become a new and potentially invaluable tool in the capital markets toolbox. Unregulated ICOs provided the inspiration for this next wave, yet the shift is already underway to make tokens enterprise-grade. The third blockchain revolution of digital assets will arguably be the most important and impactful to date.
Cobalt, the foreign exchange (FX) post-trade processing network based on shared infrastructure and high-performance technology, has appointed FX industry veteran Darren Coote as managing director.
Darren has been working with Cobalt since the end of 2017 as a strategic advisor and will now take on responsibility for the day to day management of the company. This comes at a key time for Cobalt as the company launches and looks to significantly scale its business.
Darren brings over 25 years’ experience in FX to Cobalt, having held a number of high profile roles running global FX trading and e-FX businesses at UBS where he drove the business through significant industry and technology change. He has also worked for Lloyds, served on a number of FX boards and committees including the Bank of England’s FX Joint Standing Committee and EBS’s executive board prior to the company’s sale to ICAP in 2006.
Adrian Patten, Co-Founder, and Chairman of Cobalt, commented: “We are very pleased to welcome Darren to our fast-growing team. He brings invaluable expertise and market contacts. We are confident he is the right person to lead Cobalt as we prepare to go into full production later this year.”
Darren Coote said: “Having worked in FX for over 25 years, I have seen first-hand the negative impact that aging, inefficient legacy technology is having on market participants and their bottom line. As the industry gets increasingly competitive and margins shrink, it’s important for institutions to save money and mitigate risk wherever possible.
“Cobalt is a unique solution which solves an urgent need for participants by creating a shared FX post-trade back office utility, significantly reducing risk and cost by 80%. I’m excited to play a key role in Cobalt’s development as we prepare to go live this year and re-engineer the FX market from the ground up.”
This May, Cobalt secured a strategic investment from Singapore Exchange (SGX), which operates Asia’s largest, most diverse and fastest growing FX exchange.
R3’s annual flagship conference kicks off this week in London, bringing together hundreds of developers, business leaders and blockchain engineers.
If previous years are anything to go by, the content will be fantastic – real examples, real case studies, knowledge sharing for developers, issue analysis and discussion and engaging presentations.
CordaCon provides a unique opportunity to meet and hear from R3’s clients about how they are leveraging Corda to solve real-world business problems.
Taking place over the course of two days with separate tracks of content – Developer Day (DevDay) and Business Day (BizDay) – it includes senior leaders from financial institutions, corporations, insurance firms, technology firms, independent software vendors (ISVs) and more.
The event, now in its third year, has consolidated its reputation as the fulcrum event for professionals working to apply blockchain-inspired technology to their sectors.
This is in part due to R3 having attracted a critical mass of members and partner, but also because the team’s approach was right from the start.
Rather than build an off-the-shelf blockchain solution and take it to market, R3 worked tirelessly to bring together the leading thinkers from their respective markets with the best developers and software engineers.
The resulting technology, Corda, was launched earlier this year and dozens of CordApps are being developed for it.
Such was demand that this year’s CordaCon was oversubscribed several times over. R3 and Chatsworth will be live tweeting from the event and sharing content and updates as they arise.
Look forward to seeing you there!
Yesterday, the inaugural Central Banking Fintech & Regtech Awards were held at the stunning Marriot Tang Plaza Hotel. We were very proud to see R3’s Anthony Lewis in attendance to pick up the award for the Best Distributed Ledger Technology Provider.
The new awards were held to recognise innovation in financial and regulatory technologies that were changing the way central banks and supervisors work.
R3 was picked from a strong contingent of blockchain/DLT based companies that are revolutionising the financial sector due to their transformative success in the past year.
The startup is currently engaged with Bank of Canada inside ‘Project Jasper’, an initiative which sets out to develop an interbank domestic payments settlement system, already the proof of concept touted ‘significant benefits.’
In March, HQLAx and R3 completed the first live securities lending transaction on the Corda platform – between Credit Suisse and ING. The transaction showed that using blockchain could help make the securities lending process faster and more capital efficient.
Corda’s success is evident not only by the number of institutions that use the ledger but also by those looking to invest in the technology. The company has raised over $122 million from more than 40 institutions, including Bank of America Merrill Lynch, HSBC and CLS.
In July, Corda Enterprise was launched to meet the demands of modern day businesses, especially complex institutions. With the launch, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.
We are proud to see R3 be continually recognised at the forefront of blockchain development in the financial market as we see the world begin to open their eyes to the potential of this technology.
The UK Financial Conduct Authority (FCA) announced the launch of the Global Financial Innovation Network (GFIN), a new alliance to encourage the growth of fintech globally.
The GFIN is part of the FCA’s plans to formally create a “global sandbox”, an idea it first discussed in February. A sandbox allows companies to test new, innovative products that are not protected by current regulation or supervised by regulators, reducing the time and cost of getting products to market.
The new ‘global fintech sandbox’ will involve a collaborative effort with watchdogs from around the world including the US Consumer Financial Protection Bureau, the Monetary Authority of Singapore and the Hong Kong Monetary Authority. It aims to help regulators stay ahead of the new wave of emerging technologies.
Over the past few years, watchdogs have seen the rapid rise of data analytics, the advancement of technologies such as AI and the creation of new securities such as ICOs. Under GFIN, a fintech will be able to carry out tests in different countries at the same time to solve common cross-border problems such as data protection, KYC and anti-money laundering.
The UK has established a reputation for being at the forefront of the fintech revolution and received more investment in its fintech sector than any other country in the world during the first half of 2018.
Regulators have demonstrated their commitment and willingness to work side-by-side with fintechs; the FCA was the first regulator to create a domestic sandbox in 2016, while the Bank of England has completed proof of concepts with start-ups such as enterprise software firm R3. It also launched its own Fintech Hub in March 2018.
This subsequently led to calls for a global sandbox, which received near-unanimous approval from regulatory bodies all over the world.
It is important to note, however, that not everyone believes in the importance of regulatory sandboxes. The chief of New York’s financial regulatory body said on Tuesday that the agency is “fiercely opposed” to the U.S. Treasury Department’s recent endorsement of regulatory “sandboxes” for fintech firms. Superintendent Maria T. Vullo said, “the idea that innovation will flourish only by allowing companies to evade laws that protect consumers, and which also safeguard markets and mitigate risk for the financial services industry, is preposterous.”
It will be interesting to see whether the initiative will achieve its aims and whether financial services regulators will effectively collaborate to balance the potential benefits of innovation with their traditional policy objectives.
Chatsworth welcomes this positive collaboration between regulators and aspiring fintechs, both domestically and internationally, as this gives companies a safe environment to test new ideas and learn how to effectively scale their business concepts. We would encourage fintechs, investors, governments, and other interested parties to participate in the consultation process to ensure it is transparent and fair to potential firms wishing to apply for cross-border testing.
This week Chatsworth worked with R3 in New York and London on the roll out the much-anticipated enterprise version of its Corda blockchain platform for businesses.
Corda Enterprise has been specifically optimized by R3 and its ecosystem to meet the demands of modern day businesses, especially complex institutions.
With the launch of Corda Enterprise, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.
Corda Enterprise includes the world’s only Blockchain Application Firewall, which enables the platform to be deployed inside corporate data centers while retaining the ability to communicate securely with other nodes anywhere else in the world. This is a critical requirement for many businesses when selecting a blockchain platform.
Corda Enterprise unlocks new opportunities for R3’s partner firms to expand their business, deliver new products to market faster and transform the industries in which they operate. Applications developed by partners such as Finastra, Gemalto, Guardtime, GuildOne, TradeIX and Tradewind Markets are now live on both Corda Enterprise and Corda, serving a rapidly growing community of end users in sectors as diverse as insurance, healthcare, shipping and financial services.
The launch of the platform is a watershed moment for business blockchain technology, and we are excited to continue supporting R3 as Corda Enterprise gains widespread adoption in markets across the globe.
R3 took home the ‘Best Blockchain Initiative of the Year‘ award at last night’s Financial News Trading & Technology Awards at the V&A in London.
The awards set out to celebrate the success stories of trading and technology firms operating in, and supporting, financial markets over the past year.
And it’s fair to say that the past twelve months have been very good indeed for R3. Its global network more than doubled in size, growing from 75 members in March 2017 to more than 200 today, the first CorDapp on Corda, R3’s blockchain platform has gone live and a successful Series A fundraising round in May 2017 raised $107m from more than 40 investors.
The next year is already shaping up to be another busy one for R3 with the commercial deployment of Corda Enterprise and more CorDapps due to be launched later in 2018 so watch this space.
Commerzbank successfully completed an end-to-end integration of SAP S/4HANA business processes and R3’s Corda blockchain platform. This is a significant milestone as it demonstrates that blockchain technology can be easily integrated with software from SAP, the third largest independent software provider in the world.
By merging corporate SAP systems with distributed ledger technology, corporate clients can improve the efficiency of their trade and supply chain finance services. The deployment of Corda to the SAP Cloud Platform offers the opportunity to integrate technologies such as API Management, Machine Learning and Analytics.
Such an approach enables corporations to operate on a highly distributed but permission based and secure platform while fuelling the next wave of business innovations and utilizing the key benefits of blockchain-based technologies – trust, transparency and scalability.
Commerzbank is a member of R3’s global network and an active participant in a number of R3 initiatives on use cases in areas such as trade finance. SAP is actively collaborating with both R3 and R3 members.
“Trade finance is a key area of focus for R3 as we work with our partners to develop a vibrant ecosystem of applications on Corda. Integrating the platform with SAP’s business processes is a further milestone in enabling widespread adoption of Corda by businesses around the globe,” said David E. Rutter, Chief Executive Officer, R3.
Cobalt, the FX post-trade processing network based on shared infrastructure and high performance technology, has secured a strategic investment from Singapore Exchange (SGX), which operates Asia’s largest, most diverse and fastest growing FX exchange.
SGX’s investment will support the continued expansion of Cobalt’s footprint into the FX space, further accelerating technology development and build out of the team.
Cobalt’s unique solution leverages highly optimised technology alongside an in-house immutability service based on distributed ledger technology (DLT) to deliver a shared back and middle office infrastructure that is scalable, secure and fast.
By creating a shared view of trade data, Cobalt frees up back and middle office resources from multiple layers of reconciliation; creating a ‘golden’ portfolio of FX transactions from which to provide multiple services.
The platform takes a fresh approach to financial infrastructure and has been developed to replace the dated middle and back office systems of today, which can be disorderly, inefficient, risk-laden and costly.
Adrian Patten, Co-Founder and Chairman of Cobalt, comments: “SGX’s investment is testament to our innovative application of technology in the FX space. Our platform addresses pain points faced by almost every institution that trades FX: the unnecessary cost and risk associated with post-trade processing. Singapore is an important global hub for FX and we are delighted to welcome SGX on board as we continue to expand our footprint in the region.”
Michael Syn, Head of Derivatives at SGX, comments: “We are pleased to be supporting this important FX market infrastructure, which is complementary to our growing FX futures business and a natural fit for SGX given our own commitment to product and platform innovation. We look forward to seeing Cobalt continue to gain traction in the global post-trade FX market as they pioneer FX technology development, delivering cost and risk mitigation benefits to market participants across the world.”
Henry Ritchotte, Strategic Advisor to Cobalt, comments: “Exchanges around the world continue to invest in the critical infrastructure underpinning financial markets. This collaboration between a major Asian exchange and an innovative firm that has developed a unique high performance, DLT solution is a major step forward in upgrading the systems our industry relies on to operate efficiently, safely and cost-effectively.”
The cross-border payments industry has seen a revolution in speed and transparency over the past decade or so. A generation of new companies are eyeing the role of incumbents and exploring new technologies such as blockchain to transform existing processes.
However, examples of genuine innovation are beginning to emerge amongst both new providers and incumbents. Once such example is the global banking messaging giant SWIFT, which revealed that users of its Global Payments Initiative (GPI) service, are receiving payments within minutes, and even seconds.
Nearly 50% of SWIFT gpi payments are credited to end beneficiaries within 30 minutes, and almost 100% of payments within 24 hours. With all payments fully traceable, there have been fewer enquiry-related queries, reducing costs for banks by as much as 50%.
SWIFT has set the international standard for cross-border payments for over four decades, and this week’s announcement directly addresses the perception that its payments are slow and cannot keep up with the new upstarts.
To the contrary, SWIFT gpi continues to gain significant traction; traffic already accounts for nearly 10% of total SWIFT cross-border payments, and over USD 100 billion is being transacted every day by 150 banks across more than 220 international corridors.
SWIFT has made it clear that the service currently does not incorporate blockchain technology – making the speed of payments ever-more impressive. Yet, it’s important to note that blockchain is not a panacea; any payment service must offer speed, transparency, industry-wide connectivity and have appropriate regulatory oversight. SWIFT gpi incorporates all of these without incurring huge costs for banks and their customers.
Harry Newman, SWIFT’s Head of Banking commented on today’s announcement, “Thanks to SWIFT GPI, banks are able to credit payments within minutes and even seconds, while their customers are facing shorter supply cycles and able to ship goods faster. This is a very significant step forward for banks and for their customers” says. “In addition, banks receive fewer queries and have told us their inquiry-related costs are reduced by as much as 50% when they use SWIFT GPI. This is a major service improvement to end-users and a considerable cost saving for the industry.”
It is clear that gpi service has transformed the way cross-border payments are sent and received, and further enhancements appear to be in the pipeline for 2018. As more banks use the service and integrate it with their corporate offerings throughout 2018, the number of corporates will continue to grow rapidly.
With SWIFT already playing a key role in delivering the New Payments Platform in Australia and introducing real-time payments to Europe later this year, it seems 2018 is shaping up to be a key year for the cooperative and its members.
Experts and regulators to address the new normal in sanctions, counter-terrorist financing, anti-money laundering, fraud, and cyber security
Sibos introduces a stellar line-up throughout the Compliance stream at this four-day event in Toronto. Multiple sessions will address the profound impact of the shifting geopolitical, financial crime, and cybersecurity environment. Panel debates and deep-dive sessions will cover topics such as the future of financial intelligence sharing; counter terrorist financing in the ‘lone wolf’ era; the potential of artificial intelligence to improve sanctions and AML compliance; and the fraud and cyber-crime ‘new normal’.
An ‘in conversation’ panel with Wolfsberg Group members will unveil the coming year’s priorities and trends. A Latin America-focused panel will provide an overview of the region’s banking compliance challenges.
Notable speakers participating in this year’s Compliance Forum include:
- Jennifer Calvery, Global Head of Financial Crime Threat Mitigation, HSBC
- James Freis, Chief Compliance Officer, Clearstream Banking
- William Fox, Managing Director Global Head of Financial Crime Compliance, Bank of America Merrill Lynch
- Neil Isford, General Manager, Watson Financial Services Solutions, IBM
- David Lewis, Executive Secretary, FATF
- Jerry Perrullo, Chief Information Officer, ICE
- Denise Reilly, Wolfsberg member, Global Head of Anti-Money Laundering, Citi
Must-attend sessions include:
Counter-terrorist financing- are we really stopping the bad guys – 17 October at 9:30
Panelists will explore how can banks – and governments – adapt to stay one step ahead of the bad guys, what is working and what needs to work better, and whether stringent regulations are pushing legitimate actors outside of the financial system without actually preventing acts of violence.
Fraud and cyber high alert: The new normal? – 18 October at 9:30
As high-profile security breaches continue to reverberate, this panel discussion of experts from a range of industries will discuss the benefits gained from collaboration, the landscape of payment risks, and the skills that must be developed and recruited to protect institutions and the industry.
“In conversation” with Wolfsberg – Pressing priorities and trends 18 October at 15:30
A lively discussion with Wolfsberg representatives will discuss the industry’s latest challenges, trends, and the coming year’s priorities.
Read more about the Compliance stream on Sibos.com.
The Sibos streams enable attendees to build their Sibos agenda around the topics of interest to them.
Other Sibos Streams and Tracks include:
Sibos is an annual conference, exhibition and networking event organised by SWIFT for the global financial industry. Next month, some 7,000 decision makers and topic experts from financial institutions, market infrastructures, multinational corporations, and technology partners gather in one place to do business and collectively shape the future of payments, securities, cash management and trade.
When: Monday 16 October – Thursday 19 October 2017
Where: Metro Toronto Convention Centre (MTCC)
Contact: JoAnn Healy | Press@Sibos.com | +1 212 455 1802
Get your complimentary Sibos Press Pass today
Accredited journalists are welcome to attend Sibos free of charge. To obtain your complimentary press pass for Sibos 2017 Toronto, contact: Registration@Sibos.com.
Don’t miss your chance to be right in the middle of the news at the premier financial services event of the year.
Follow us on Twitter: @Sibos #Sibos
Follow us on LinkedIn: www.linkedin.com/company/Sibos
This year there were no big headline tech launches to speak of which is unusual for an event which in years gone by saw the launch of Twitter and Foursquare, to take but two.
But this year, the tone and content was quite different. The changing political landscape loomed large, chiefly with the ‘tech under Trump’ work stream but also with keynote speeches from Joe Biden and Corey Booker.
For 2017, the recurring theme was on a pervasive lack of trust and transparency between individuals and organisations, as well as between society and its governments.
Various barometers of sentiment reveal that we are at a historical low for trust in institutions such as banks and the media.
Four panels and presentations focused on the technology variously known as Blockchain or Distributed Ledger and how it can be applied to hardwire and build trust into our systems and interactions.
Discussions ranged from how this tech enables individual contribution, makes it easy to collaborate, decentralises power and creates hope for increasing equality.
There were hands-on workshops and introductions to some of the protocols, coding and design challenges in creating distributed data structures.
As a recap on ‘Blockchain’, it is effectively a record of assets, or any other kind of content, that is shared, replicated and encrypted so it becomes a verified and immutable source of truth. The blocks can’t be modified, but can be viewed, meaning a huge benefit lies in the added trust and transparency that provides.
Dr Tomicah Tillemann, of New America’s Bretton Woods II program is working with his team to apply the principles of blockchain to the US land registry system.
Speaking at SxSW he commented: “Institutions right now provide the facts at the foundation of our reality. I know there’s a land registry somewhere that says I own my house. I swipe my card because I know the bank will transfer the right money for me. As soon as people lose confidence, those systems start to break down really quickly.
“The exciting thing about blockchain is that it has the potential to create a layer of authentication and validation that can’t be tampered with. It’s a layer of reality locked in mathematically, and it’s locked in permanently, which is something we’ve never had before.”
IBM was also in attendance, focusing on the wider potential application of blockchain, announcing a blockchain solution with shipping container giant Maersk to track shipping containers across the world
With over 90% of goods in global trade carried by the ocean shipping industry each year, there are clear benefits to enhancing transparency and sharing information.
From the exchange of money between two parties, to documenting how goods move through a supply chain, and the making of contractual agreements, there are significant savings to be had in terms of cost and time as well as the potential to reduce risk and increase trust.
In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed, says David Rutter, CEO of R3.
Darwin’s point holds true. Critical mass, momentum and co-operation are absolutely essential if we are to transform financial services and the communications and transactional framework we rely on.
This was our rationale for bringing banks together to jointly develop distributed ledger technology for the financial services industry from day one.
In R3 we have created a fast moving financial technology product company with an ownership structure which provides a balanced governance, combined with the leadership and stewardship of the best technologists in their respective fields.
The spaghetti junction of shared legacy infrastructure as well as individual front, middle and back office systems is testament to the resulting mess when banks disappear into development silos.
The overall cost of maintaining this legacy infrastructure is incalculable and there is risk around every corner, embedded into the old Cobol and Fortran code under the layers of many of those systems.
That is why we came together with an initial group of nine banks in September 2015 to create R3. A highly experienced and effective technology team was assembled and ready for action two months later.
Fast forward a year and there are now over 75 members of the R3 group – with two additions in the last week alone – working together on a diverse array of projects and developing technology to address some of the most serious pain points affecting the industry.
There is no secret. We hired the best, assembled and activated a powerful and engaged membership base and connected them together to leverage the network effect distributed ledger technology delivers.
Together, we have designed, built and launched Corda, the open-source release distributed ledger platform which will set the standard for this technology in global financial markets.
This is the only platform designed by and for its users and represents the world’s largest collaborative distributed ledger effort in financial services. It is unique and it is a landmark moment for the market.
Distributed ledger technology will have such phenomenally powerful network effects that it is hard to imagine serious institutions deploying base-layer ledger software that is anything other than fully and wholeheartedly open.
The response and engagement with Corda has been exceptional and only a few weeks after open sourcing the platform we have already had a vast number of contributions from the public developer community.
Amidst the excitement of the Corda roll-out, it’s hard to ignore the running commentary on the progress of our fundraising programme.
The motivation and accuracy behind some of the noise has sometimes been questionable, but such is the nature of working on such high-profile projects. It’s a complement to be discussed and we are very happy with constructive criticism, but better when the discussion is informed and accurate.
We have always expected the make-up of the consortium to change over time – our member base is so large and so diverse, it would be unrealistic not to expect some institutions’ priorities, resources and focus to travel in different directions.
We have new members joining the project all the time and some banks may choose to change the way in which they engage with us as we move forward, but the critical mass we have built over the last year means members can be confident they are investing in developing industry standard solutions that will be the building blocks of the new financial services infrastructure.
The financial institutions that have shown the vision to join R3 are by that very action ensuring the technology we adopt is built using common code and protocols, ensuring seamless interoperability and integration.
This is a direct hedge against the risk of replicating the disjointed infrastructure financial markets are forced to operate on today.
We remain focused on perfecting Corda and looking ahead to our objectives and deliverables for 2017 working together with our members.
We are on the cusp of a new era in financial technology, and over the next year banks will begin to reap the benefits that have been promised to them since the financial services industry recognized this technology’s potential to deliver efficiency, lower risk, security and cost reductions.
Let’s be clear: the power of distributed ledger technology lies in its network effect – and that goes for the build as much as the usage. The past few years were characterized by blockchain hype. Leveraging the combined power and expertise of our diverse and growing group of members, R3 will make 2017 the year of blockchain delivery.
Payment processor QIWI becomes the first Russian company to join the consortium’s global network.
R3, the global blockchain consortium behind the development and application of distributed ledger technology in financial markets, has expanded its membership with the addition of its first Russian member.
QiWi’s online payment system is one of the most widely used payment systems in Russia. It is used to make online purchases and pay for loans, mobile bills, and even home utilities, and offers terminals where users can make payments as they would on their mobile device.
QIWI is a payment services provider and the first Russian institution to collaborate with R3. It has long recognized the benefits of blockchain technology; earlier in July, the firm expressed interest in joining the blockchain consortium created by the Central Bank of Russia.
“Our goal with R3 is to explore this emerging technology space as we shape the future of payments and transactions throughout collaborative research with other members of the consortium,” says Sergey Solonin, QIWI’s chief executive officer. “We believe that blockchain projects that we are currently working on can be applied on one of the R3 platforms and have great potential to be favorably perceived by regulated financial institutions.”
The firm joins over 60 leading financial institutions, who collaborate in R3’s lab environment, R3’s Lab and Research Centre.
David Rutter, CEO of R3, said “The addition of QIWI is a further milestone for R3 … as we expand our network of consortium members and continue to develop truly global applications for this groundbreaking technology.”
R3 executives speak publically for the first time about Project Concord and their vision for the future of blockchain technology.
Distributed ledger and blockchain technology represents a once-in-a-generation opportunity to transform the economics of data management across the financial industry.
However, R3 believes the blockchain and distributed ledger platforms that led to this breakthrough moment were never designed to solve the problems of financial institutions and do not meet all their needs. These include tight linkage to the legal domain, an obligation to prevent client data being shared inappropriately and interoperability with existing financial infrastructure.
As reported in the Wall Street Journal, the R3 blockchain consortium filed a patent for its Corda shared ledger platform.
Corda is the outcome of the analysis R3 undertook on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible but in a way that is sympathetic to, and addresses, the needs of regulated financial institutions.
The platform enables firms to record and process financial agreements using smart contracts, as explained in depth in R3 CTO Richard Gendal Brown’s latest whitepaper.
Corda is part of Project Concord, R3’s overall vision and roadmap for transforming financial services infrastructure. Concord will address challenges such as governance, internal record keeping and regulatory reporting across the financial services marketplace.
With a number of successful prototypes having already been completed on the Corda platform and an alpha launch of Concord scheduled for 2017, the next year looks set to be a turning point in the history of financial technology.
Two top R3 executives featured on industry rankings in technology this week.
David Rutter, CEO of R3, and Richard Gendal Brown, CTO, appeared on the Institutional Investor Tech 50 and the Financial News Fintech 40 respectively.
David ranked at number 18 on this year’s Institutional Investor Tech 50 list, recognising the financial market acumen and technological sagacity that led him to launch R3 in 2014. The consortium now boasts over 55 institutions working with R3 to develop applications for distributed ledger technology in the financial services market which could change financial services as profoundly as the Internet changed media and entertainment.
Richard was named one the most influential people in the European financial technology sector for his work with R3, which includes overseeing the team of developers responsible for Corda, R3’s distributed ledger platform for financial services.
Over 1,300 fintech professionals arrived at Tobacco Dock in East London yesterday morning for SWIFT’s annual Business Forum London conference, which has become the must-attend yearly event for this rapidly growing industry.
After a quick coffee in the sunlight-filled atrium of the impressive nineteenth Century tobacco warehouse, the day’s proceedings kicked off with a panel debate based around the event’s theme for 2016: building the future. SWIFT’s CEO, Gottfried Leibbrandt took to the stage along with Digital Asset Holdings’ Blythe Masters, RBS’s Director of Payments Marion King and Andrew Hauser, Executive Director of Banking, Payments and Financial Resilience at the Bank of England.
The themes that emerged in this session set the tone for the day, with one of the reoccurring debates focusing around how banks and other incumbent service providers could co-exist with fintech startups seeking to ‘disrupt’ and innovate in areas such as payments. SWIFT’s inspired agenda ensured that almost every panel debate featured representatives from both sides of the fence, and it was fascinating to see the level of collaboration between some of the giants of the banking world and young, agile startups, with both sides bringing their inherent unique strengths to the table.
Of course the most popular theme of the day was blockchain, with seemingly every panel discussing how distributed ledger technology could be used to revolutionise their particular areas of the industry, and the R3 initiative being singled out as leading the charge in light of its launch of the Corda platform, which Barclays had tested in front of a live audience just a few days earlier.
There was a distinct air of excitement and positivity in all the conversations we had and overheard at the event yesterday, and we left with a sense that, even though we are only four months in, 2016 could usher in some of the most significant developments the fintech space has seen for a very long time.
Tech giant Microsoft and Chatsworth client R3 today announced a strategic partnership that will accelerate the use of blockchain-inspired distributed and shared ledger technologies among R3 member banks and global financial markets, as reported by the Wall Street Journal and Bloomberg.
These technologies enable enterprises and business network participants to complete financial transactions with greater speed, security, cost-efficiency and transparency relative to solutions currently used.
As part of the partnership, R3 will use Microsoft Azure as a preferred cloud services provider in its R3 Lab and Research Centre, where distributed and shared ledger technologies are being developed and tested and use-cases carried out based on an extremely rigorous, empirical-evidence based process.
The Lab and Research Centre has quickly become the centre of gravity for use-case testing and evaluation of blockchain-inspired technologies, bringing together banks, non-banks, both established and start-up financial technology companies, trade associations and regulators.
R3 and consortium members will have access to Microsoft’s expanding ecosystem of Blockchain-as-a-Service (BaaS) partners including Ethereum and ConsenSys, Ripple, Eris Industries, Coinprism, Factom, BitPay, Manifold Technology, AlphaPoint, IOTA, BlockApps STRATO, Tendermint LibraTax, and many others that will aid in the development, testing and deployment of distributed ledger applications in cloud, hybrid and local environments.
Entrepreneurs, investors and enthusiasts claim that public blockchains are an acceptable settlement mechanism and layer for financial instruments. But Chatsworth client R3 argues that public blockchains by design cannot definitively guarantee settlement finality, and as a result, they are currently not a reliable option for the clearing and settling of financial instruments.
Read the full article by R3’s Tim Swanson on TabbFORUM
The trial represented the trading of fixed income assets between 40 of the world’s largest banks across the blockchains, using multiple cloud technology providers within R3’s Global Collaborative Lab.
This marked an unprecedented scale of institutional collaboration between the financial and technology communities exploring how distributed ledgers can be applied to global financial markets.
The banks connected to R3-managed private distributed ledger technologies built by Chain, Eris Industries, Ethereum, IBM and Intel. They evaluated the strengths and weaknesses of each technology by running smart contracts that were programmed to faciliate issuance, secondary trading and redemption of commercial paper, a short-term fixed income security typically issued by corporations to raise funding.
Each of the distributed ledgers ran a smart contract based on identical business logic to enable the banks to accurately compare the difference in performance between them. Cloud computing resources were provided by Microsoft Azure, IBM Cloud and Amazon AWS to host the distributed ledgers.
The R3 member banks involved in this trial included Banco Santander, Bank of America, Barclays, BBVA, BMO Financial Group, BNP Paribas, BNY Mellon, CIBC, Commonwealth Bank of Australia, Citi, Commerzbank, Credit Suisse, Danske Bank, Deutsche Bank, J.P. Morgan, Goldman Sachs, HSBC, ING Bank, Intesa Sanpaolo, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Natixis, Nordea, Northern Trust, OP Financial Group, Scotiabank, State Street, Royal Bank of Canada, Royal Bank of Scotland, SEB, Societe Generale, Toronto-Dominion Bank, UBS, UniCredit, U.S. Bank, Wells Fargo and Westpac Banking Corporation.
Further exciting developments are set for the months ahead, as R3 continues to work with the banks in its Global Collaborative Lab to test and develop applications based on distributed ledger technology for the financial services industry. The Lab has quickly become a center of gravity for collaborative applied blockchain efforts in the financial services and distributed ledger technology industries.