img-title

Digital Trade Chain: 7 Banks Could Go Live With Blockchain in 2017

Seven major European banks are partnering on a new blockchain-based trade finance platform, with a tentative plan to launch sometime in the second half of 2017.Dubbed Digital Trade Chain (DTC), the initiative grew out of an earlier proof-of-concept spearheaded by Belgium-based bank KBC and first unveiled in July of last year.Those backing the platform’s development are looking to establish a secure place to manage open account trade transactions for both domestic and international commerce. DTC utilizes a permissioned ledger, with authorized parties allowed to submit transactions on the platform.Open account trade transactions involve products being shipped before the actual payment is due, meaning that trust among the transaction’s parties is imperative. With DTC, those plugged into the system will be able to track the progression of those transactions, from initiation to settlement.Thus far, the banks involved – KBC, Deutsche Bank, HSBC, Natixis, Rabobank, Société Générale and UniCredit – have signed a memorandum of understanding that lays out the basic groundwork for future development. That said, the banks are looking to launch DTC sometime in 2017, with an eye to building support in markets like France, Germany and the UK.In statements to CoinDesk, the banks involved say the goal is to cut transacting costs for European businesses, particularly for more modestly sized firms.Roberto Mancone, global head of disruptive technologies and solutions for Deutsche Bank, said of the initiative:“The aim of the platform is to make domestic and cross-border commerce easier for European small and medium-size (SME) businesses by harnessing the power of digital distributed ledger technology.”Shared costsFollowing the expected launch later in 2017, in addition to major markets like Germany and the UK, countries like Belgium, Luxembourg and the Netherlands are also being actively considered for roll-outs.Andrew Betts, head of global trade and receivable finance for HSBC’s Europe division, said the 2017 release target was an ambitious but realistic one.“It’s an aggressive timeframe but we believe it’s achievable,” Betts told CoinDesk.That success, the banks indicated, will be incumbent, at least in part, on attracting a sufficient number of businesses to build a network effect."For DTC to be successful, it needs to be available and accessible by a large number of SMEs – hence the importance of having a number of banks involved," Mancone explained.To help meet that goal, the banks are backstopping the project with an undisclosed amount of capital, with each putting up an equal amount to pay for developers and other costs.Mancone concluded:“By pooling our resources, the platform has a greater chance of success.”

img-title

University of Pennsylvania: Blockchain's Biggest Challenge is Security

The Blockchain hype isn’t over yet say analysts at the University of Pennsylvania. If developers and companies successfully overcome regulatory and security-related hurdles in the upcoming months, the university says it is likely to see the implementation and commercialization of Blockchain in 2017.Dead endBanks, financial institutions and leading multi-bln dollar corporations are struggling to deal with various conflicts in the implementation phase of Blockchain stemming from regulatory and security issues.In order to stay on par with financial policies and money transmission regulations, it is necessary for banks or other institutions to remain in control of a network, regardless of its cryptographic or technical attributes. Because Bitcoin is decentralized in nature, banks are trying to utilize its underlying technology and remove decentralization from Bitcoin to retain control of transactions and other operations within the network.This has always been a dead end for any major entity experimenting with Blockchain technology as they either have to build a permissioned or centralized Blockchain and compromise security or develop an immutable and decentralized Blockchain platform and decline to comply with regulations.The traditional financial industry is a heavily regulated market. It has strict regulations and policies set in place to ensure that money is not used to fund illicit operations and any criminal activities. The failure to comply with regulations may result in blns of dollars in penalties, as seen in the recent mortgage fraud case of Deutsche Bank, in which the German company agreed to a $7.2 bln settlement.Joe Ventura, CEO of AlphaPoint, told the University of Pennsylvania that:“The truth is, once you give someone access to a network, many times, more often than not, they can end up very easily getting blanket access to that network. This is a huge security problem. Basically, you have to jump through so many hoops simply to pass the message from some party to another party.”Blockchain or database?Currently, the Blockchain industry is being funded by venture capital firms, banks, financial institutions, angel investors and large technology firms that see great potential in the technology. However, Blockchain is still in its early stage and it is important for startups or any entity attempting to utilize Blockchain technology to ask themselves if it is the database technology they are seeking or really an immutable Blockchain platform.Tyler Mulvihill, director of ConsenSys, told the university:“Is it a Blockchain use case or is it a database use case? If you are a company that has a lot of information internally and you don’t transact like a lot of vendors, and not a lot of people need to use your information or do business with you, a database can be fine for a lot of things.”

img-title

Market Infrastructure Giants to Tap DLT for Collateral Management

A group of central securities depositories (CSDs) is working with stock exchange operator Deutsche Börse on a new blockchain-based solution aimed to improve collateral management.CSDs from Canada, Luxembourg, Norway and South Africa – all members of the Liquidity Alliance – are working with the stock exchange firm to create what they have dubbed the “LA Ledger”. The initiative is currently in the prototyping phase, using the code underlying the Hyperledger project as its basis.The firms involved are looking to seek approval for the solution from regulators later this year, according to statements – a process that could begin as early as the second quarter.Glenn Goucher, president and chief clearing officer for the Canadian Depository for Securities Limited, said in a statement:“With this initiative, we pursue an innovative partnership approach that will allow us to jointly embark on distributed ledger technology with a use-case that is highly relevant to the wider industry”The initiative is the latest blockchain-related project for Deutsche Börse, which began testing the technology in early 2015. In late November of last year, the firm revealed that it was working with Germany’s central bank on a securities trade prototype.Additionally, other CSDs, including those from Russia and China, have moved in the past year to test applications of the tech, in both individual and collaborative settings.

img-title

Accenture: Blockchain Could Save Investment Banks $12 Billion Annually

A new report from Accenture posits that large investment banks could cut operational costs by as much as $12bn annually by implementing blockchains in their business.Released today, the report (co-written with benchmarking consultancy McLagan) focuses on the kinds of cost savings investment banks could potentially achieve through use of the tech to streamline various office functions.Financial reporting expenses, for example, could fall by at least 70%, whereas compliance costs could drop between 30% and 50%, according to Accenture.Overall savings, the firm suggests, could be between $8bn and $12bn a year.David Treat, managing director for Accenture’s blockchain unit, said of the report:"Given the tremendous cost of data reconciliation – which is part of every aspect of the capital markets industry – it's no surprise that we've seen a significant amount of investment in blockchain technology."Accenture argues that the tech could help halve costs associated with customer identification and anti-money laundering controls, as well as cut general business offices by 50% annually as well.

img-title

Reserve Bank of India Successfully Tests Blockchain Technology

The Indian central bank recently tested Bitcoin’s underlying blockchain technology. The Reserve Bank of India’s research arm is said to be involved in its first ever end-to-end test of the technology along with other stakeholders of the country’s financial system.Institute for Development and Research in Banking Technology (IDRBT), the Reserve Bank’s research arm has worked closely with the regulators, banks, financial institutions and clearing houses during the evaluation process. MonetaGo, a New York-based cryptocurrency firm served as a technology partner during the study.The adoption of blockchain technology among stock exchanges and trade platforms is increasing. The potential of blockchain technology to automate trade settlements and transactions can prove to be a huge cost saver for financial institutions. Even Reserve Bank of India’s experiment involved the use of blockchain in a trade application and the results are now available in a white paper titled “Applications of blockchain technology in banking and financial sector in India”.In the white paper, the central bank has concluded that blockchain is indeed a disruptive technology that can potentially revolutionise the financial industry. The successful proof of concept could pave the way for further in-depth research into a wide range of potential applications in the sector.The Reserve Bank’s blockchain research follows a recent partnership between one of the Indian banking majors, ICICI Bank and Stellar. ICICI bank had announced its plans to develop a Stellar-based blockchain application for transactions within closed groups. Few other Indian banks working on blockchain technology includes Axis Bank and Yes Bank. Axis Bank, in partnership with Ripple, is set to offer cross-border payment services over distributed ledger.Successful exploration of blockchain technology by the country’s central bank will also help the growing Indian Bitcoin community. In the recent days, the country has seen a dramatic increase in Bitcoin adoption and the government’s openness to the technology can translate to a lenient regulatory view towards the cryptocurrencies.

img-title

FTC’s Fintech Forum to Focus on Blockchain Technology

The implications of blockchain technology in the consumer sector will be the focus of the Federal Trade Commission’s (FTC) 2017 FinTech Forum in March.With an announcement on Friday, the half-day event will see industry participants, researchers, government representatives and consumer groups come together on March 9, 2017. This is the third FinTech forum hosted by the US consumer protection agency and the topics of the 2017 edition will look into blockchain technology and artificial intelligence.The open-to-all event will also see participants discuss and explore the potential benefits of the two technologies in consumer services as well as their implications to consumer protection.An excerpt from the announcement sees blockchain technology described by the FTC as follows:Blockchain technology involves a distributed digital ledger for recording transactions that can be shared widely. It first emerged as the foundation for digital currency, and it is now being explored for other consumer-focused uses including payment systems and “smart contracts.”The underlying focus of its FinTech events, the governmental agency says, is to keep up and encourage newly-developing and emerging financial technologies while protecting consumers protected. Encouraging innovation is key, the FTC says, even as models such as peer-to-peer (P2P) lending, among others, gain popularity as new forms of finance. Previous editions of the event have focused on marketplace lending and crowdfunding.The FTC has previously wielded its authority in the bitcoin space in the case of Butterfly Labs. The agency shut down the failed bitcoin mining equipment manufacturer, citing its “unfair or deceptive business practices,” in a civil lawsuit in late 2014. The bitcoin mining hardware manufacturer later agreed to settle charges with the FTC in early 2016.This year’s FinTech Forum will be held at the University of California in Berkeley at 9 A.M on March 9 with no pre-registration necessary for those attending. The FTC is soliciting invitations for panelists presently and is expected to a full schedule of events soon.

img-title

Swiss Bank & German Energy Company Partner to Deliver Blockchain Wallets for Cars

Swiss banking giant UBS bank has partnered with German energy company Innogy and automobile manufacturing company ZF to provide a blockchain-backed Car eWallet that enables charging of electric cars.Due to be showcased at CES in Las Vegas, the Car eWallet can also be used for other payment related services such as parking fees, car sharing or road tolls by paying on-the-go, reports theInternational Business Times.In a UBS statement, it said:With the Internet of Things we will see in the future more and more devices enabled to autonomously pay for services. For UBS it is important to experiment and learn how we can support clients to manage and authorise their device payments.With the use of the Car eWallet a user will simply transfer money online from their PC to a mobile app, which links to their Car eWallet. They will then be able to pay for services within a certain limit automatically.Dr Carsten Stöcker, of Machine Economy Lighthouse Innogy SE, said:Technology driven innovation in the mobility and transport system will be a key driver for the fourth industrial revolution.German Energy and BlockchainThe blockchain is making headway in the German energy industry.In November, a survey found that the energy sector could soon be adopting the blockchain technology with many energy companies outlining a road map for its implementation in the future.Not only that, but in September, German energy giant Enercity announced that its customers now had the option of using the digital currency bitcoin as a method of payment for their utility bills.The energy industry is realizing that as bitcoin and its distributed ledger continue to gain traction in so many other industries, the sector is also keen to take advantage of the new technology and the benefits it can provide.Blockchain Disruption to BanksBlockchain has the potential to disrupt how banks operate.So much so, that an IBM survey conducted in September found that from insights gathered from 200 global banks, 15 percent of those banks could be running blockchain solutions as early as this year.In a bid to keep up and to take advantage of the blockchain, UBS believes that the blockchain could be ‘the next Internet’, according to a report from the Australian Financial Review, which is why it’s throwing its resources behind the technology to develop it further.With more companies embracing the blockchain and what it can do for services, 2017 could be a good year for the technology.

img-title

Blockchain Payments Platform OKLink Launches in Vietnam

Hong Kong-based blockchain settlements platform OKLink is now available in Vietnam, enabling international remittances with near-instant settlements over both local fiat currency and bitcoin.With 6.8% of its total GDP in inward remittance, Vietnam is a market ripe for disruption in the space, with emerging FinTech innovations offering the potential for near-instant, low-cost settlements. OKLink, a sister company of major digital currency exchange OKCoin, will now enable senders to transfer up to $10,000 to Vietnam at a relatively modest delivery fee of 0.5%, calculated at a mid-market exchange rate.Receivers can cash-out via a bank account, cash pick or a mobile wallet, each with its own timelines for settlements, according to a company blog. OKLInk claims to enable worldwide transfers to any Vietnamese account among 27 banks within 30 minutes. Further, ATM cards with 22 banks and regional mobile wallet Vimo will see near real-time transfers with settlements within ten minutes, according to the Fintech firm.In a statement, Jack C. Liu, strategy chief at OKLink said:To be able to offer such quick and cheap money transfers to Vietnam is really significant to OkLink’s partners and to Vietnam’s economic development.OKLink’s remittance platform works with its digital token OK Dollar (OKD), a unit of which is equivalent and is backed by a US dollar. Notably, unlike other disruptive remittance providers like Transferwise, OKLink also allows transactions to be settled using bitcoin.Vietnam joins a growing list of Asian countries enabled with inward remittance via OkLink. Outside Asia, Brazil, Canada and the European Union also count among payment destinations.Recently, the FinTech firm’s expansion effort in the world’s largest inward remittance market, India, was established via a partnership with Indian bitcoin exchange Coinsecure. Launched in August 2016, OKLink has raised over $10 million in funding so far and offers payouts to 40 countries spread across Asia, Europe and The Americas.

img-title

IBM Watson and FDA to Secure Medical Data with the Blockchain

IBM Watson and FDA to Secure Medical Data with the BlockchainIBM Watson Health is joining forces with the Food and Drug Administration (FDA) to apply blockchain technology to improve the public healthcare system. This initiative, announced January 10, is focused on creating a more efficient, secure and scalable interchange of health data by incorporating the use of blockchain technology. Both the IBM and FDA plan to explore the interchange of patient’s personal health data from a range of sources comprising of Electronic Medical Records, genomic data, clinical trials, data on health from mobile devices and wearables.IBM Watson analyzes massive volumes of data, can comprehend complex questions and can propose answers based on evidence. Through a process of ever ongoing learning, IBM Watson Health is enhancing the ability of doctors, researchers and insurers to innovate using insights from the vast quantity of personal health data being created and shared. IBM stated their intention to merge the technologies of Artificial Intelligence and the Blockchain, as BTCManager reported in August 2016.Innovative solutions will be within reach given that the researchers and health providers can gain full access to the overview of patient’s records. Currently, patients have limited access to data to their own health data, and this initiative will empower patients, by providing access to their own records as well as share their information with health providers. Now IBM is turning to the blockchain to allow for the secure transfer of data among all healthcare providers, inviting an opportunity for innovations that would be of benefit to the parties involved to make better choices.ADVERTISEMENTThe initiative with the FDA part of a two-year agreement, where IBM Watson Health and the FDA plan to share initial research findings in 2017. The blockchain’s application here at best will integrate the healthcare system seemingly providing a trusted cooperative environment, by introducing clarity and accountability into the process of data interchange.Shahram Ebadollahi, Vice President for Innovations and Chief Science Officer, IBM Watson Health, stated:“The healthcare industry is undergoing significant changes due to the vast amounts of disparate data being generated. Blockchain technology provides a highly secure, decentralized framework for data sharing that will accelerate innovation throughout the industry.”Health care systems have been limited with regards to sharing large data resources due to the challenges faced such as data breaches of patient's confidentiality. Blockchain technology enables the storage of records during the process of exchanging of the data and is most significantly immutable; this brings the transparency, security, and audit of accounts to reality with certainty.According to IBM Institute for Business Value paper, entitled “Healthcare Rallies for Blockchain” more than seven in ten industry leaders expect big benefits for managing clinical trial records, regulatory compliance, and medical/health records from adopting blockchain applications in the healthcare system.The examination of the blockchain’s uses by the IBM and FDA has the ambition of improving public health through the integration of an array of various data in a healthcare ecosystem that will ignite biomedical discoveries. As the press release states, “Patient data from wearables and connected devices, for example, can help doctors and caregivers better manage population health.”As the promise of blockchain in healthcare becomes increasingly evident, IBM will work to define and build the technological solution for a scalable and decentralized data sharing ecosystem. The long-term ambition of the project is to put consumers and patients in the epicenter of how their medical data will be shared and used.

img-title

SWIFT, The DTCC and How Blockchain Will Go Mainstream

Noelle Acheson is a 10-year veteran of company analysis, corporate finance and fund management, and a member of CoinDesk's product team.The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday, exclusively to our subscribers.We caught a glimpse last week of how blockchain tech will go mainstream.No, it won't be through killer apps developed by startups, consortia rolling out a consensus solution or breakthroughs in privacy or security. Rather, it appears it will happen when large incumbents roll out blockchains in existing processes.That may not sound exciting, but it is a big deal (or at least, as big as we're going to get in the short term).But, we need to remember that financial institutions are not generally known for their flamboyance or risk taking. And we need to bear in mind that only the incumbents have the reach to test the technology at scale in the short term.Two events indicate that this process has already begun:The DTCC's announcement that it will migrate the post-trade processing of credit derivatives to a DLT system in 2018SWIFT's reveal it is launching a proof-of-concept to test the blockchain’s impact on real-time reconciliation of international accounts.Diving inOn the surface, the two announcements have remarkable similarities:They both come from structural giants owned by their members or users, ensuring buy-in from most of the main sector participants.Both instigators dominate their respective activities. The DTCC is the largest central securities depository (CSD) in the world, and it provides processing services for about 98% of all credit default swaps. Swift, on the other hand, is the world's largest electronic payment messaging system, used by more than 11,000 financial institutions.Both SWIFT and DTCC are founding members of blockchain consortium Hyperledger, which indicates an interest in experimentation and collaboration.Both announcements may seem bold and sweeping, but they are actually exercises in caution.This last point merits further consideration, as it is likely to be a key factor for success:Both DTCC and SWIFT plan to combine the new technology with existing systems. Even after the new platform goes live in 2018, DTCC will continue to run its old one in parallel. SWIFT plans to combine the blockchain under trial with its current identity protocol and public key infrastructure.Both plan to make adoption optional. This should reassure those members and users who prefer a "wait-and-see" approach, and allows for gradual roll-out across their respective sectors.In neither case are we looking at new, innovative services. We're looking at potential improvements on current processes.In both cases, blockchain technology will not initially be used for actual settlement or payments, to mitigate systemic risk. The focus will be on the handling and reconciliation of information, not money.Slow and steadyWhile blockchain enthusiasts may be disappointed at the limited scope of the applications, we need to bear in mind that for the technology to have significant real-world impact, it needs broad implementation in a conservative industry.Also, it needs regulators to be comfortable with the pace of change.Whichever project becomes a reality first, a large portion of the financial sector will be using blockchain technology to simplify processes and reduce costs. This is likely to trigger a domino effect, with other securities markets and clearing services adapting to keep up.Increased confidence will trickle over into further blockchain applications for payments and settlement. Substantial amounts of capital will be freed up. And millions of users will get used to the subtle efficiencies of a new technology as it quietly and cautiously powers the beginning of a fundamental structural change.Assuming the initiatives go to plan, one thing is certain: We are looking at a tipping point.Click Here to Never Miss a Weekly Email AgainCurtain image via ShutterstockDisclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.