Bitcoin has been making news since 2009 for both positive and negative reasons. Billions of dollars have been invested into Bitcoin, and billions more have been invested in similar cryptocurrencies and associated tokens. However, attention is increasingly shifting away from Bitcoin to the technology behind it – the blockchain technology.
Banks and major financial institutions are already leveraging the benefits of blockchain technology with great success. ING Group is the latest to use blockchain technology to settle transactions through startup R3CEV.
ING Group & R3CEV Process $30 Million In Settlements
On May 1, 2018, ING Group NV and Credit Suisse Group AG announced that they successfully completed securities lending transactions estimated to be worth over $30 million using blockchain technology via a platform created by HQLAx. This transaction was done in partnership with R3CEV LLC, a startup that has stoked controversy in its ambitious attempts to apply Bitcoin and blockchain technology to financial transactions.
HQLAx chose to use the Corda platform built by R3CEV for this transaction. The transaction involved the transfer of legal ownership of German and Dutch government securities. The underlying securities themselves remained static in accounts that are registered under their custodians while the transfer utilized the HQLAx Digital Collateral Records. This is the latest development in this field, but it is not the first and will by no means be the last.
Blockchain Technology In Banking Is A Growing Trend
The banking industry was initially opposed to the idea of cryptocurrencies and some banks even banned their employees from transacting in Bitcoin. However, the industry has come to acknowledge the benefits of blockchain technology, especially for large and complex transactions.
For starters, transactions conducted via blockchain technology are quicker compared to traditional transactions – for example, it takes minutes to perform stock transactions that usually take about two days as it eliminates the need for intervention of banks and advisers. Blockchain technology is also secure and prevents fraud as it is hosted on a global network platform that is transparent and rigid – one party cannot defraud another party through activities such as double spending.
It is for these reasons and more that are luring banks to adopt and use blockchain technology. For instance, Goldman Sachs, one of the largest banks, has already rolled out its own version of Bitcoin dubbed SETLCoin for use in settling trades involving bonds and stocks. Nasdaq is also developing its equivalent of Bitcoin and plans to roll out its blockchain technology are already underway.
Many other banks and financial institutions are also adopting blockchain technology for complex transactions. Some of the banks on this list are Wells Fargo, Citibank, Morgan Stanley, HSBC, Bank of New York Mellon, and Bank of America, among others.
Looking To The Future Blockchain In Banks
There are uncertainties about the future of blockchain in banks, but major players believe that they will both inevitably integrate. Mark Buitenhek, the Global Head of Payments and Cash Management at ING, projects that it will take about 12 months for blockchain technology to become fully integrated into the banking system. He further adds that it will be revolutionary and will change finance and banking for the better.