Competitions and Partners:

Deutsche Bank:

The bank has said that it has been exploring various use cases of blockchain in areas like payments and settlement of fiat currencies, asset registries, enforcement and clearing derivative contracts, regulatory reporting, KYC, AML registries, improving post-trade processing services, etc. It has been experimenting on these technologies at their innovation labs in London, Berlin and Silicon Valley (July 2015).

NASDAQ:

The stock exchange firm initially revealed (May 2015) that they were planning to use blockchain as an enterprise-wide technology to enhance their capabilities on the NASDAQ Private Market Platform. The NASDAQ Private Market Platform is a new initiative launched in January 2014, to enable pre-IPO trading among private companies. It has also said that they would leverage the Open Assets Protocol, a colored coin concept, to build their private exchange platform. Later, in June 2015, it announced a partnership with Chain, a blockchain infrastructure provider for FIs and enterprises.

DBS Bank:

The bank organized a blockchain hackathon in Singapore in partnership with Coin Republic, a Singapore-based bitcoin company & Startupbootcamp FinTech. (May 2015)

BitX, Blockstrap and Colu provided the APIs for the two-day hackathon series. The winners were Omnichain (first place, an investment platform for emerging markets), Nubank (second place, provides banking for the unbanked) and BlockIntel (third place, a transaction security platform).

EBA:

Euro Banking Association (EBA) has released a report (in May 2015) talking about the implications of crypto-technologies from the perspective of transaction banking and payment professionals in the coming one to three years. It has noted that these technologies could be leveraged by banks to reduce governance and audit costs, to provide better products and faster time to market.

US Federal Reserve:

Federal Reserve is reportedly working with IBM on developing a new digital payment system tied to blockchain. (Mar 2015)

SCB:

In a post on LinkedIn, Anju Patwardhan, Chief Innovation Officer of Standard Chartered Bank, said that blockchain could be leveraged to cut costs and improve the transparency of financial transactions. (July 2015)

There have also been reports that derivatives companies CME Group, Deutsche Boerse, clearing houses DTCC (depository trust & clearing corporation) and EuroCCP are working on projects around the use of blockchain in areas such as clearing. Also, there has been news that money transfer service provider Western Union could possibly look into Ripple technology to understand blockchain.

Below is a brief of banks experimenting with blockchain that we have previously reported:

Fidor Bank:

The bank has partnered with Kraken to provide a digital currency exchange in EU, and with Bitcoin.de, a P2P BTC trading platform in Germany. It later partnered with Ripple Labs to provide money transfer services.

LHV Bank:

Reported to have started working on blockchain technology in June 2014. They developed an app based on colored coins called Cuber Wallet in June 2015. They also have partnerships with Coinbase & Coinfloor and are experimenting on digital security with blockchain.

CBW Bank, Cross River Bank:

Partnered with Ripple Labs to build risk management system and provide lower cost remittance services.

Rabobank, ABN Amro, ING Bank: Exploring blockchain for various banking services. Rabobank has also partnered with Ripple Labs.

Goldman Sachs:

Goldman Sachs participated as a lead investor in bitcoin startup Circle Internet Financial Ltd.’s $50M funding round. It has also reported extensively on bitcoin and blockchain in their annual publication Future of Finance.

BBVA Ventures:

Investor in Coinbase. Has also released research report stating interest in blockchain technology.

Santander:

Claims to have 20-25 use cases for blockchain and has a team called “Crypto 2.0” to research the use of blockchain in banking.

Westpac:

Westpac had partnered with Ripple to develop a low-cost, cross-border payments platform. Reinventure, its VC arm, participated in Coinbase’s $75M Series C funding.

UBS:

Has a cryptocurrency lab in London and is experimenting in the areas of payments, trading & settlement, smart bonds. It is planning to build an enterprise-wide product called “utility settlement coin” in partnership with Clearmatics. It has also stated that they have 20-25 use cases of blockchain for finance.

BNY Mellon:

Created own currency called “BK Coins” as a corporate recognition program which can be redeemed for gifts and other rewards.

Barclays Bank:

The bank has two bitcoin labs in London that are open for various bitcoin and blockchain entrepreneurs, coders and businesses. It has also partnered with Safello, to develop various banking services on blockchain. It is also running accelerators to provide blockchain enthusiasts mentoring and a chance to work with the bank on specific projects (Everledger is one of the companies that has emerged from Barclays’ accelerator program). Barclays also claims to have 45 experiments they want to do internally.

CBA: Has partnered with Ripple Labs to implement blockchain ledger system for payment settlements between its subsidiaries.

USAA Bank: Created a research team to study uses of bitcoin.

ANZ Bank: Partnered with Ripple to explore potential use cases of blockchain.

BNP Paribas: Experimenting at making transactions faster by using blockchain.

Societe Generale: Planning to staff employees with BTC, blockchain and cryptocurrency expertise.

Citibank:

They have set up three separate systems within Citi that deploy blockchain-based distributed technologies. They developed an equivalent to bitcoin called “Citicoin,” which is being used internally to understand the digital currency trading system better.

Public and private blockchain concepts and examples:

Public blockchain: A public blockchain is a platform where anyone on the platform would be able to read or write to the platform, provided they are able to show proof of work for the same. There has been a lot of activity in this space as the number of potential users that any technology in this space could generate is high. Also, a public blockchain is considered to be a fully decentralized blockchain. Some examples:

Ethereum, a provider of a decentralized platform and programming language that helps running smart contracts and allows developers to publish distributed applications. Factom, a provider of records management, records business processes for business and governments. Blockstream, a provider of sidechain technology, focused on extending capabilities of bitcoin. The company has started experimenting on providing accounting (considered a function to be done on private blockchain) with the use of public blockchain technology. Private blockchain: A private blockchain, on the other hand, allows only the owner to have the rights on any changes that have to be done. This could be seen as a similar version to the existing infrastructure wherein the owner (a centralized authority) would have the power to change the rules, revert transactions, etc. based on the need. This could be a concept with huge interest from FIs and large companies. It could find use cases to build proprietary systems and reduce the costs while at the same time, increase their efficiency. Some of the examples could be:

Eris Industries aims to be the provider of shared software database using blockchain technology. Blockstack aims to provide financial institutions back office operations, including clearing & settlement on a private blockchain. Multichain, provides an open source distributed database for financial transactions. Chain Inc., a provider of blockchain APIs. Chain partnered with Nasdaq OMX Group Inc., to provide a platform that enables trading private company shares with the blockchain. Let’s explore if there is a hybrid blockchain concept (third type). A consortium blockchain would be a mix of both the public and private. Wherein the ability to read and write could be extended to a certain number of people/nodes. This could be used by groups of organization/firms, who get together, work on developing different models by collaborating with each other. Hence, they could gain a blockchain with restricted access, work on their solutions and maintain the intellectual property rights within the consortium.

Let’s explore if there is a hybrid blockchain concept Blockchain: The new innovation for financial services

Blockchain has been one of the most awe-inspiring innovations since the Internet came into existence. Blockchain technology basically allows everyone to hold and make transactions as strangers but in a completely transparent manner. There is no mediator in between two people making the transaction, and the entire process becomes easier and cheaper. This concept can be applied to the entire digital world making any kind of exchange/transactions secure (and not just bitcoin). This article will take you through numerous such business models and companies that are beginning to sprout based on blockchain tech.

The blockchain network consists of nodes, i.e., distributed servers. All the nodes can accept and process the transaction. The nodes on the network share information about the candidate transaction. As much as the logic/tech part of it sounds confusing, the business models are so much easier to understand and are really impressive.

What you have already seen is that blockchain distributed ledger is an in-erasable record of bitcoin transactions. The network of computers around the world running bitcoin software will take care of the performance and maintenance of the blockchain network. About six times per hour, a new group of accepted transactions (a block) is created, added to the blockchain and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent.

It is this feature of Blockchain technology that has grown in its popularity amongst large banks, developers and entrepreneurs. Santander Bank, the world’s 10th largest bank, has also been investigating blockchain technology. They have announced that an internal team is working on applying blockchain technology and distributed ledgers on various use cases in the bank. Other international banks like Citi and JPMorgan have also been showing interest in Blockchain technology.

Many startups are building their businesses around blockchain technology. Consequently, VC firms like KPCB are showing interest in investing in these startups. While startups like Coinometrics gather data and research on qualitative and quantitative behaviors on blockchains, there are others like BTCJam who provide bitcoin-based loans. A number of other startups built around blockchain technology include BlockCypher, BitPay and BitPagos. Another interesting startup, Chain, helps companies build financial products around blockchain technology with its bitcoin data API. NASDAQ has chosen Chain to run a pilot around blockchain technology on the NASDAQ Private Market.

With growing applications of blockchain technology and triggers by VC firms like KPCB Edge funds, the day is not too far when the blockchain might disrupt the entire FinTech industry.

What are blockchain use cases and initiatives taken by financial services industry?

The interest of financial institutions on blockchain is quite evident considering that Santander Bank has identified 20 to 25 use cases for the technology. The bank also estimated that the usage of blockchain by banks can reduce the infrastructure cost by up to $20 billion a year. Other banks such as UBS have set up a blockchain research lab in London, Goldman Sachs has invested in bitcoin startup Circle, and NASDAQ is also experimenting with the technology.

Blockchain technology allows everyone to hold and make transactions as strangers but in a completely transparent manner. There is no mediator in between two people making the transaction, and the entire process becomes easier and cheaper. This concept can be applied to the entire digital world, making any kind of exchange/transactions secure.

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