A new blockchain-based platform is on the horizon, and it is the result of a cooperation between foreign exchange settlement provider CLS, enterprise software giant IBM, and nine financial institutions, including big names such as Citigroup and Barclays, the companies said in a statement on July 30, 2018.
LedgerConnect: Blockchain Platform for Banks
This revolutionary platform is LedgerConnect, and it will provide services and applications by various companies including sanctions screening, collateral management, customer compliance checks, and more. Specifically, LedgerConnect is a distributed ledger technology (DLT) for the financial services industry designed to enable banks, software retailers, buy side and sell side companies, fintech firms, and others to deploy, share, and consume services hosted on a blockchain.
The companies have chosen services from vendors such as Baton Systems, Copp Clark, IBM, Calpyso, OpenRisk, SynSwap, Persistent Systems, and MPhasis. At its base, it resembles consumer app stores, but it focuses on financial companies, making it less costly and more straightforward for them to use the blockchain-based software.
Need for Speed Fuels Project Forward
The reason behind this project is the need for speeding up the adoption of blockchain-based applications in the banking sector, as banks are testing many such apps, but not many of them have gone into production. According to the companies, building and testing each app separately by banks is too expensive and lengthy. Lee Braine of the chief technology office at Barclays’ investment bank stated:
“Barclays is participating in the LedgerConnect proof-of-concept so we can gain an understanding and experience of a new network for blockchain applications – and also test some candidate use cases on that network.”
Moreover, this route, the apps can go through proper vetting to ensure they meet the technical and security standards of financial companies, believes CLS chief strategy and development officer, Alan Marquard. He stated:
“LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce the risk for a diverse range of firms operating in the financial markets. We expect LedgerConnect to deliver enhanced efficiencies and economies of scale over single-purpose distributed ledger networks.”
IBM and CLS Lead the Financial World in Adopting Blockchain Technology
Marie Wieck, the general manager at IBM Blockchain, explained that IBM and CLS are pioneers in advancing blockchain solutions for the sector of financial services. She believes that “LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry,” given CLS’ established relationships with many financial leaders. She anticipates accelerated innovation across the ecosystem with value-added services for blockchain networks.
IBM has long-established quite a reputation in the blockchain industry, after partnering with global payment and trading platform, Stronghold, to explore novel business apps using their stablecoin, “stronghold USD,” built on Stellar Lumens’ blockchain.
In April 2018, IBM proudly announced the development of watertight source material tracking using blockchain technology. It’s called the TrustChain Initiative, and its goal is to help jewelers avoid buying the so-called blood diamonds or illicitly and unethically mined products.