World’s biggest banks saddle up to blockchain
(16 September 2015 – Europe) Nine of the world’s largest banks have formed a partnership with technology startup R3 have all formed a partnership to draw up a framework for using blockchain in banking.
Included in the global initiative is Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JPMorgan, State Street, Royal Bank of Scotland, and UBS and Goldman Sachs.
David Rutter, R3 CEO, and a 32 year veteran of Wall Street, is leading the partnership.
Rutter said in a statement “This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system,"
“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.”
The blockchain is the software that both powers and regulates cryptocurrency bitcoin, and in its most basic form, records its ownership.
The software removes the need for a middleman, making a transactions more efficient and cost effective when compared to existing systems used by banks. Therefore, financial institutions are keen to see if it can be adapted for use with traditional currency, rather than just bitcoin.
The open ledger technology used by blockchain enables a higher level of transparency, meaning transactions are free for anyone to inspect and not stashed in some private data centre.
Rutter says he began approaching banks just over a year ago after visiting around 30 blockchain and bitcoin companies he was considering investing in.
“The lightbulb went off that distributed ledger technology could be to finance what the internet was to media.” said Rutter
According to Rutter, a “wish list” of what banking partners want to use blockchain technology for, covers “everything from issuance, to clearing and settlement and smart contracts, where the code is the contract and it saves on back office costs.”