Nine of the world’s largest banks have formed a new partnership to help accelerate the broader adoption of blockchain technology in the financial industry.
The initiative aims to draw up industry standards and protocols for using distributed ledgers technologies in finance and banking.
According to Hu Liang, Senior Vice President and head of Emerging Technologies at State Street, blockchain technology “could transform how financial transactions are recorded, reconciled and reported – all with additional security, lower errors rates and significant cost reductions.”
R3 CEO David Rutter, a former Wall Street executive, said that more banks are expected to pledge their support in the coming weeks. According to the Financial Times, Goldman Sachs is also involved in the partnership.
“Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable,” Rutter said.
“This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system.”
The group will collaborate on research, experimentation, design and engineering to “help advance state-of-the-art enterprise-scale shared ledger solutions” that meet banking requirements in terms of security, reliability, performance, scalability and audit, R3 said.
R3 and its bank partners will work within a collaborative lab environment or “sandbox” to test and validate distributed ledger prototypes and protocols.
The banks will also back R3 with seed capital, contributing “several millions of dollars” to the initiative, a person familiar with the talks told the Financial Times.
Commenting on the new partnership, Kevin Hanley, Director of Design at Royal Bank of Scotland, said:
“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. R3’s [collaborative] model is changing the game.”
R3 isn’t the only firm looking to capitalize on the rising interest in blockchain technology.
Blythe Masters’ Digital Asset Holdings, has recently unveiled home-designed same-day settlement systems.
Another organization that seeks to boost the adoption of blockchain technology among the financial industry is the Wall Street Blockchain Alliance, a trade advocacy group launched in March.
Led by financial market professionals, the advocacy group seeks to engage with regulators, policymakers and technology innovators to guide the public dialogue about digital currencies and blockchain technology, so that “the financial markets can realize the full potential of their capabilities.”