by Joseph Young
R3CEV, more commonly known as the R3 Consortium, member BNY Mellon is recruiting blockchain experts and developers to establish its own technology and blockchain team. The multi-billion dollar bank’s decision to form an in-house development group coincides with the R3CEV’s exit from the blockchain industry.
On February 24, R3CEV officially exited from the blockchain scene with a press release entitled “When is a Blockchain Not a Blockchain?” authored by R3CEV founder and CEO David Rutter. The research and development team of the R3 Consortium told its members and investors that for their technologies and solutions like R3 Corda to succeed, blockchain technology isn’t necessary.
In a corporate presentation to discuss the development of R3 Corda, R3CEV developers stated: ”No ‘blockchain’ because we don’t need one.” The R3CEV team further emphasized that by detaching itself from blockchain technology, they will be able to focus on building technology that is compliant with regulations and industry-wide standard protocols such as AMQP, JDBC, PKIX and more.
The difficult decision of the R3 Consortium to move on from blockchain technology can be viewed as an intelligent and realistic business resolution in consideration of its investors and member banks that have raised hundreds of millions of dollars to fund the R3 Consortium.
Over the past few years, many financial institutions including the member banks of R3 have funded expensive blockchain projects under the assumption that the global financial ecosystem and industry is in urgent need of an innovative and revolutionary technology like the blockchain. However, the financial sector’s IT infrastructure is significantly outdated, and most of their systems are not compatible with a next-generation technology like the blockchain.
“At the outset, our architecture team identified its first priority to be to decide whether to adopt, adapt or build. Put simply, if we found another platform currently in the market that was fit for purpose for regulated financial institutions, such as a traditional blockchain, we would have had no need to build our own, and we would have gladly adopted it wholesale or adapted it as necessary,” said Rutter.
While the R3CEV is betting on their new non-blockchain software in R3 Corda, member banks such as BNY Mellon is establishing their blockchain development teams and groups on the sideline. BNY Mellon still believes blockchain technology could revolutionize and innovative some aspects of the financial industry.
For the most part, BNY Mellon’s vision is not unrealistic. There exist many operations within the vast realm of finance that could benefit from automatic transfer and processing of data handled by the decentralized, transparent and secure architecture of blockchain technology.
In the upcoming months, with the assistance of the company’s Emerging Business & Technology (EBT) global head Alex Batlin, who also is the bank’s global lead for blockchain, BNY Mellon will actively look into various technologies including blockchain and blockchain-based Internet of Things (IoT) protocol.
"[EBT’s vision is to establish a] global cross-functional mandate to investigate business disruptive emerging technologies, define appropriate strategies to maximize on presented opportunities while mitigating threats, and execute those strategies using a franchise network," said a spokesperson of BNY Mellon.
As a long-term strategy, the plan of BNY Mellon to distribute their focus on both the development of their blockchain-based platforms and the R3 Corda is viable, mostly because at this early stage of development, it is hard to speculate which technology will succeed and become commercialized in the long run.