Trial comes as financial services sector struggles to drive efficiencies
IBM, Barclays and Citi Bank and foreign exchange settlement specialist CLS have teamed up to trial LedgerConnect – essentially a blockchain app store for financial services – in a live environment, they said on Monday.
The companies, along with five other financial institutions that have declined to be named, are testing a Proof-of-Concept (PoC) with the aim of sharing apps and services on a common distributed ledger network
They have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems to participate in the PoC. The aim is to secure operational efficiencies.
LedgerConnect was developed by CLS and IBM.
CLS describes it as “an asset-class agnostic platform through which an ecosystem of banks, buy- and sell-side firms and software vendors can deploy and consume services to realize operational efficiencies and cost savings in new and unprecedented ways.”
It runs on a permissioned blockchain built on Hyperledger Fabric. All the apps currently in the store are Hyperledger-based. However, the founders are open to other enterprise blockchain solutions making use of the app store, they said.
Fabric is also the first blockchain system that runs distributed applications written in standard, general-purpose programming languages, (e.g., Go, Java, Node.js). without systemic dependency on a native cryptocurrency.
Potential use cases include customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation as well as market data on the blockchain, the consortium said.
CLS describes other potential back-office applications of the technology as OTC trade matching, margin and collateral management, asset movement and consolidated stock record, among others.
The launch comes as the financial services sector scrambles to secure operational efficiencies amid regulatory and margin headwinds.
Financial institutions are looking to distributed ledger systems as a way of surmounting expensive reconciliation processes, which are often based on a combination of legacy systems and manual processes. Blockchain is increasingly being explored as a way to improve the speed of doing business by providing a single, shared version of events and one implementation of common business functions.
LedgerConnect aims to provide a single shared network on which multiple services can be deployed and consumed.
Computer Business Review contact CLS to ask how much the proof of concept project would cost, but they declined to inform us.
Alan Marquard, Chief Strategy and Development Officer at CLS commented in the release that: “LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce risk for a diverse range of firms operating in the financial markets.”
Marie Wieck, GM for IBM Blockchain commented in statement that: “Together IBM and CLS have been early pioneers in advancing blockchain solutions for the financial services space.”
“Building on the success of CLSNet and leveraging the strong relationship CLS has with the world’s leading financial institutions, LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”
Both companies have stated that once the proof of concept is completed and there is a generation of market demand and they are in receipt of all necessary regulatory approvals, they then plan to make it available to industry in general.