Banking giant including Citigroup and Barclays have entered into a collaboration with IBM and forex (FX) settlement provider CLS for a Trial Blockchain Project named “LedgerConnect”. The initiative is hopefully making possibilities for the banking sector, software vendors, and fintech corporations to deploy, share, and consume blockchain-based software.
To accelerate the innovation in the ecosystem, LedgerConnect has been developed by IBM in partnership with Hyperledger which will serve as a blockchain marketplace for the financial sector. Banking giants Barclays and Citi are among two of the nine financial institutions that are taking part in the proof of concept (PoC).
Although, the reluctance is there for sure due to the high investment and high-risk factor but for the sake of inventing robust economic growth this crucial step is needed.
Alan Marquard, CLS chief strategy, and development officer mentioned earlier: it was “a big ask” for banks to integrate blockchain. “You are not just installing a piece of software. They need to build operational knowledge and know-how,” and “it has security implications”. Without disclosing the cost of development, Marquard also added: “Building on new tech is always more expensive. We took the step and made this investment. Nobody has a crystal ball.”
Further, he stated, “LedgerConnect will offer safe and robust solutions which will cut costs while reducing risk.”
With this platform, banks will be able to allocate services on a network rather than distributing resources to application development with limited expenditure on operations and technology. The provision for other technologies such as R3’s Corda, Quorum, or the public Ethereum blockchain is expected to be offered in future but LedgerConnect will be restricted to Hyperledger Fabric-specific applications which will focus on tried and tested areas such as market data, derivatives post-trade processing and reconciliation, collateral management, sanctions screening, and Know Your Client (KYC) processes.
IBM blog post stated:
“Operating on a private permission network based on the IBM Blockchain Platform and Hyperledger Fabric technology, LedgerConnect will be designed for regulated and security-conscious enterprises and available across asset classes. Support for additional ledger technologies may be provided in the future, based on market demand and developments.”