Plans to revolutionise international ledger technology have caught fire, with the announcement on 29 September that 13 major banks have signed up to the R3 consortium’s blockchain initiative.
R3’s scheme aims to repurpose blockchain software – the system that currently supports the contentious cryptocurrency Bitcoin – into a common protocol that will enable seamless, global transaction maintenance across and between all the leading institutions.
Co-founded last year as a humble start-up by financial technology (‘fintech’) wunderkinds David Rutter and Jesse Edwards, R3 has spent much of its life as a concept in search of a home – but last month, that changed dramatically.
On 16 September, Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, JPMorgan, Royal Bank of Scotland, State Street and UBS became the first nine banks to join the scheme.
Their fulsome expression of interest has now attracted Bank of America, BNY Mellon, Citi, Commerzbank, Deutsche Bank, HSBC, Mitsubishi UFJ Financial Group, Morgan Stanley, National Australia Bank, Royal Bank of Canada, SEB, Societe Generale and Toronto-Dominion Bank.
Rhom Ram, head of Deutsche Bank’s digital agenda in transaction banking, explained that the organisation’s decision to join the consortium marks the culmination of extensive research – and a gradual awakening within the financial community.
“We have been looking at all these developments for at least 18 months now,” he said, “and for a long time I was talking to myself within the banking community. But definitely within the past five months there is a lot more understanding, interest and momentum.”
Mitsubishi UFJ’s CIO of digital innovation, Satoshi Murabayashi, said: “In putting together this partnership, R3 is committing its own expertise and leveraging the combined resources of all of our partners to deliver a distributed ledger solution that could help our clients realise that experience. We’re excited to be a part of the team.”
Rutter welcomed the consortium’s new partners to the table. “The addition of this new group of banks demonstrates widespread support for innovative distributed ledger solutions across the global financial services community,” he said, “and we’re delighted to have them on board.
“Our partners recognise that a collaborative model is the best way to quickly, efficiently and cost-effectively deliver these new technologies to global financial markets.”
R3 chief technology officer Richard Brown elaborated on the consortium’s vision, saying: “Over decades, banks and other firms have built systems for themselves. [But] with shared or distributed ledgers, perhaps we can imagine a world where participants share this infrastructure, so rather than everyone running their own systems that have to be reconciled, we [will have] an open platform that multiple firms can connect to.”