Banks Fall Over Themselves in Race to Integrate Blockchain Technology

Blockchain adoption by traditional financial institutions will not happen anytime soon. At least, that is the message their official spokespeople are converting to the world. But according to IBM, there has been a rush to embrace distributed ledgers and integrate them into core systems. Things are looking positive for Bitcoin technology, even though banks will not embrace the open standard.

According to IBM, nearly 15% of all banks around the world are planning to integrate blockchain technology by 2017. That timeline is in stark contrast to the message financial institutional been conveying themselves as of late. Most of them do not see a first mover advantage when it comes to blockchain technology and prefer the wait-and-see approach.

The Race For Blockchain Integration Is Underway

However, the roll-out of commercial full-scale blockchain applications may happen a lot sooner than people think. Although the year 2017 is almost upon us, IBM expects a lot of banks to have services ready by then. This means there is still a lot of work to be done to make distributed ledgers “play nice” with legacy technology.

More importantly, more than 60% of all banks around the world should have a blockchain product in the next three years. That is quite a statement by IBM, although they are in the midst of this wave of innovation. Mainly banks with 100,000 employees or more are rushing to get distributed ledgers integrated into their products and services.

Although IBM only surveyed 200 banks, this trend cannot be denied. While this is only a small sample of all the banks in the world, it goes to show something will change sooner rather than later. Since every financial institution wants to remain competitive, they will all follow another’s lead when it comes to innovation. In this case, that means embracing blockchain as one of the first.

This news comes at the time when experts assumed adoption of distributed ledgers was still five to ten years away. Once again, the so-called experts have been proven wrong, and it is not the last time that will happen. Bitcoin and its technology have shaken up the financial sector, and the time to act was yesteryear. While banks rush to get a blockchain product out there, the bigger question is whether or not they are too late to the party.

Source: Reuters

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The R3 Consortium is a collection of several dozen financial institutions all over the world looking to explore blockchain technology. But the group continues to expand, and Toyota Financial Services is their latest member. Merging distributed ledgers with automotive financial services will be quite an interesting experiment.

R3 Welcomes Toyota Financial Services

Toyota Financial Services is not your average bank, as the company focuses on automotive financial services. They are also the first player in that particular industry to join the R3 consortium. Leveraging the possibilities of distributed ledger technology is the primary objective of this new partnership.

Chris Ballinger, CFO, and GCO Strategic Innovation told the media:

“Toyota Financial Services is excited to join the R3CEV consortium to advance the use of distributed ledger technology in finance.  We believe this technology will ultimately lower costs, increase efficiency and make auto finance more transparent for our customers. Beyond finance, we believe additional applications of the technology in auto manufacturing and sales will benefit our customers by making mobility more affordable and available. TFS welcomes the opportunity to contribute to the development and advancement of the R3 ecosystem.”

It is interesting to see the R3 consortium refer to Toyota Financial Services as a non-bank institution. When the consortium was first created, it appeared as if the world’s major banks were showing a keen interest in distributed ledger technology. R3 CEO David Rutter positions this initiative as a”growing network of non-bank institutions” these days. An interesting choice of words, to say the least.

The role of Toyota Financial Services will come in the form of joining the global network of consortium partners. Moreover, the automotive financial services company will become a part of R3 Lab and Research Centre. Collaborative research and testing of distributed ledgers will always remain the primary objective.

Adding such a valuable partner to the R3 consortium is a significant milestone for the distributed ledger group, though. Toyota Financial Services is the finance and insurance brand for Toyota in the US. Plus, they also handle financial products for Lexus dealers and customers under the Lexus Financial Services umbrella.

Source: Press Release Via Email

Header image courtesy of Toyota Financial Services

Even more financial institutions are turning towards the blockchain these days, as the technology will help financial players reduce overhead costs and offer better security standards. DBS and Standard Chartered have partnered up to venture into the world of blockchain technology in an attempt to reduce fraud rates.

DBS and Standard Chartered Take On The Blockchain

It is positive to see financial entities actively explore the blockchain to not just improve their services regarding speeding up transactions, but also to combat one of the most common threats in the form of fraud. With the fraud rates in finance going up year over year, a new solution has to be found, and the open-source nature of blockchain technology looks quite appealing.

DBS and Standard Chartered have partnered up to venture into the world of blockchain technology, which should hopefully lead to the creation of a ledger of invoices. Wielding this technology will then reduce the number of fraudulent transactions in the financial sector, as every invoice would be recorded in a tamper-proof environment.

In fact, there are other players interested in exploring this concept further, if the trial proves to be successful. Both Bank of America and HSBC see the value in this ledger of invoices, and we may very well see this technological solution being embraced by the majority of financial institutions in the future.

Despite the broad landscape of financial technology, there is no common platform for banks to screen transactions financed by other banks. The reason for this is simple: there are too many confidentiality concerns, as customers may try to capitalize on this information-sharing gap to obtain financing from different financial players by using the same invoice. That is one of the many scenarios which should be avoided at all times in the financial sector.

Although DBS and Standard Chartered have tried their ledger of invoices at the end of 2015, not too many details have been revealed regarding their progress ever since. However, those trials only include several dozen mock invoices, which is not comparable to a real-life business environment where several hundreds of invoices would be processed on an hourly basis.

Moreover, both Standard Chartered and DBS are actively promoting the usage of distributed ledger technology in the financial world, thanks to the help of Infocomm Development Authority in Singapore. This technology holds a lot of promise for the future, and it is positive to see financial players actively explore the boundaries of blockchain.

Source: IBS Intelligence

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Ripple has always been an initiative to bridge the gap between blockchain technology and traditional banking. Now that this protocol has been showcased as an integration into Temenos T24, the future is looking for bright for Ripple and its partners.

Temenos T24 Integration is a Big Milestone for Ripple

There are a lot of people who have never heard about Temenos T24 before, even though it is one of the most commonly used core banking technology solutions. But even this core protocol has to evolve over time, and keeping an eye on new technologies is always a good business strategy.

Now that there is a bigger focus on new technology for payment solutions than ever before, the discussion ultimately turned toward blockchain technology. By the look of things, Ripple’s version of the blockchain protocol is something the Temenos T24 team is growing fond of, and a pioneer project was presented by Deloitte in which these two technologies were combined.

By fully integrating Ripple blockchain technology into Temenos T24 – by using the Bluzelle Altitude Gateway – a new standard for bank-to-bank settlements can be created. There is a growing demand for faster settlement procedures, preferably in real-time, and the Ripple protocol provides financial institutions with the technology to realize this potential.

Deloitte Partner and Technology Leader Patrick Laurent stated:

“There is an enormous potential for banks to leverage disruptive technologies to make their existing payment processes faster, cheaper, and more secure. Innovative financial institutions are aware of this and are looking for ways to integrate their core systems with disruptive technologies such as distributed ledgers or blockchain.”

Deloitte is focusing a part of their efforts on merging Fintech with core banking systems, in the hopes of creating new opportunities. Successfully doing so requires bringing together the right players and show what their combined efforts could lead to. Integrating the Ripple protocol into Temenos T24 lets financial institutions send payments in real-time without requiring intermediary banking relationships.

The success of this pioneer project could elevate traditional finance to a whole new level in the coming years. Newer generations of customers are driving change in the banking sector, and financial players have to keep an open mind towards disruptive technology. It appears as if the three-day waiting period for bank transfers to clear will be coming to an end very soon.

Source: Finextra

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The second SWIFT hack sheds an interesting light on permissioned systems and cybersecurity. Although no data has been hacked, the loss of money could have been prevented by using more modern technology, such as distributed ledgers as the one found in Bitcoin.

Distributed Ledgers Vs. Archaic Centralized Systems

While it is commendable SWIFT representatives openly admit their network played a part on yet more financial losses, there is also an aura of defeat regarding the announcement. To make matters even worse, there is no indication as to who is responsible for this attack, and representatives of SWIFT network participants might be involved, since legitimate credentials were used to steal funds.

At the same, this is another prime example of why the legacy system – and its archaic underpinning technology – need to be replaced with a more modern solution sooner rather than later. Using firewalls used to be an excellent way to protect financial systems, but hackers have become a lot smarter throughout the years. This leaves security experts well behind the curve of technological innovation, which hackers will gladly take advantage of.

Distributed ledgers, a technology often touted as the new way to conduct finance all over the world, seem to be the obvious solution to this problem. Most people know this technology through Bitcoin, a decentralized cryptocurrency not controlled by banks. Financial institutions have started to pay more attention to distributed ledgers over the past few months, but there is a very steep learning curve associated with this technology.

While some financial experts feel it is still too early something as significant as distributed ledgers, the question becomes how much longer they can afford to hold off on this inevitable change. Moreover, the advantages of blockchain have become apparent to everyone in the world, as it is a cost-effective solution which is incredibly expensive to try and hack by third parties.

It is impossible to tell whether or not the financial world will embrace distributed ledgers anytime soon. What we do know is how many of them are looking into exploring the boundaries of this technology, although hardly any of these efforts have led to significant integrations just yet. This second SWIFT attack in recent months makes distributed ledgers far more appealing than any targeted promotion ever could, though.

Source: Seeking Alpha

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Distributed ledger aficionados have been telling people this for quite some time now, but the blockchain will have an impact on various aspects of life. After all, this technology is the biggest innovation in computer science, and despite facing a lot of opposition, there are plenty of opportunities to be explored.

Also read: Bitcoin Regulations, the Debate Must Go On

Blockchain Goes Well Beyond Bitcoin And Finance

One way to get the concept of distributed ledger technology on the minds of more people around the world is by writing a book explaining this concept and its possible ramifications. One of the new books touching upon this subject is called Blockchain Revolution, and it will come out on May 5th.

As one would come to expect from such a book, there is a reference made as to how the blockchain is best known for powering the Bitcoin protocol. However, given the open source nature of distributed ledgers, there is plenty of room for innovation, and companies would do well to explore how distributed ledgers can impact our daily lives.

With all of the venture capital flooding into the blockchains scene throughout 2015 and 2016, it will only be a matter of time until the first distributed ledger projects come to fruition. However, there is a question as to when blockchain will become a global trend, rather than a niche market being explored by lots of parties who are not sure whether they will do something with it or not.

Most people are well aware of the consequences blockchain technology can have on the banking system, through faster and cheaper money transfer solutions. Some aficionados even feel distributed ledgers will create a cashless revolution in the coming years as cash transitions into a digital counterpart. Whether or not that will be the case, remains to be seen, but is certainly a possibility.

Looking at the bigger picture for a moment, this technology will have an impact on some of the more recent disruptive business models. Airbnb recently acquired the ChangeTip staff to integrate blockchain solutions into their offering. However, the company had no plans to use Bitcoin shortly, which only seems normal.

But content creators will be able to reap the rewards of this technology as well, as they can come up with new ways to reach a global audience and monetize their creations. Bitcoin may play a role in this process, though, as it is the only global payment solution available today that does not require bank participation or access to existing financial services.

Last but not least, there is the topic of data privacy. Distributed ledgers are very transparent by nature, and solutions have to be found to let users display or hide as much or as little data as they want. One possible outcome is putting consumers in full control of all of their data, which they can then sell to the highest bidder, rather than having companies collect it free of charge.

Source: Financial Post

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Digital Asset Holdings keeps making a name for itself and expanding their reach all over the world. Now that they have acquired Elevence Digital Finance, the future of distributed ledgers looks a lot more bright in Switzerland and other European countries.

Also read: What Place for Gambling to Choose

Digital Asset Holdings Acquires Another Startup

Aficionados may have heard of Elevence Digital Finance before, as this startup is focusing their attention of a modeling language to determine rights and obligations in blockchain collaboration agreements. This Swiss blockchain startup has made quite the name for itself in recent months, and that has not gone by unnoticed.

Exploring the boundaries of blockchain technology is what most startups are focusing on right now, but Digital Asset Holdings is looking well beyond this phase Two important topics need to be addressed, as both independent transactions updates and data confidentiality are of the utmost importance.

Now that Digital Asset Holdings acquired Elevence Digital Finance, they can start offering a complete solution that tackles not only the technology side of things, but also a way for involved parties to verify all transactions independently. Moreover, the blockchain outfit also acquires the eight-person team behind the Swiss startup, which can be beneficial for future distributed ledger projects.

Blythe Masters has a clear plan for Digital Asset Holdings, as the company has been on an acquisition streak as of late. Creating a comprehensive solution that will integrate distributed ledgers in financial services while also offering additional features to preserve confidentiality and independence, will help put this company on the radar in the coming years.

Based on the information we have received, the Elevence technology will be rolled into the software solution offered by Digital Asset Holdings. This will help the blockchain company to provide partners with records that are synchronized and accurate at all times while relying on distributed ledger technology.

Last but not least, this acquisition will lead to Elevence CEO Vincent Peikert joining Digital Asset Holdings as their head of Digital Asset Switzerland, as well as head of product for Europe. Elevence CTO James Litsios, on the other hand, will become head of development at Digital Asset Switzerland.

Source: Finextra

Header image courtesy of Digital Asset Holdings

Digital currency enthusiasts paying attention to Ether may have noticed the price has started to go up again in the past few days. Although there is no concise reason as to why this would happen, there has been some relatively good news for Ethereum users in recent days.

Also read: Homomorphic Encryption and Smart Contracts for Privacy and Transparency

Two Interesting Ethereum Projects 

Two exciting events have caught some attention among Ethereum users as of late. The first project focuses on spreading the word on blockchain technology, both from an Ethereum and Bitcoin perspective. This may not seem like a significant milestone for the popular digital currency, but given the current focus on the blockchain, it might be a reason for increasing interest in Ethereum.

This Blockchain 101 course has been posted in video format on the Udemy platform. Although it is not free to watch – and only runs for 37 minutes – the content seems to provide an interesting insight as to how distributed ledger technology can be used. For developers looking to get involved in financial services, Bitcoin might be a better fit although smart contracts have their appeal as well.

What is kind of interesting to note is how this video also makes a mention of how users will need some previous experience with databases and basic computer protocols. There are five different lectures which explain the technical topics of blockchain technology, as well as an overview of the three most important pillars of a distributed ledger.

Internet of things, on the other hand, is a revolutionary concept which seems to lean towards using the Ethereum blockchain over Bitcoin’s offering. As intriguing as the idea of connecting all devices to the internet may sound, security of the utmost importance to make this concept successful. Especially when keeping in mind how tons of data will be collected and transmitted among the devices powering the Internet of Things.

This is where decentralized ledgers would come into the picture as it allows for free communication and transaction between connected devices. But what makes Ethereum a preferable blockchain is the ability to deploy smart contracts which can be autonomous. Moreover, these contracts are decentralized and distributed, eliminating any possibility of centralized control of censorship.

Communication between Internet of Things devices goes much further than recognizing each other on the Internet. Millions of devices will establish relationships online, and managing everything will require technology that is not only scalable but also easy enough to understand for everyday people.

Source: Zapchain

Header image courtesy of Ethereum

The R3 consortium is actively developing a blockchain solution that can integrate with the existing legacy system, and their partnership with a lot of the world’s leading banks will help them achieve that goal. Corda, their distributed ledger platform for managing financial agreements, has been unveiled to the public.

Also read: Ethereum Price Technical Analysis 04/06/2016 – Trend Overwhelmingly Negative

R3 CEV Corda Platform For Distributed Ledgers

Ever since the R3 consortium announced their blockchain project in September of 2015, a lot of digital currency community members have been wondering what this platform would look like. There has been a lot of talk about private permissioned blockchains, which would create centralized control for banks and other financial institutions.

R3 CEV CTO Richard Brown has written a new blog post, in which he talks about the Corda platform and what its ultimate purpose will be. Keeping in mind how the team decided to build up this concept from the ground up, presenting a working theory in roughly six months is quite a feat. However, there is always a question as to how much help they have gotten from the Ethereum blockchain, as that seems to play a critical role in the plans of this consortium.

It has to be said that adopting Corda would remove most of the trust issues financial player shave. Even though banks work together in the grand scheme of things, there is a lot of distrust between parties, as they all keep separate records of financial transactions and agreements. Distributed ledger technology can solve all of these issues, and create a somewhat trustless ecosystem for all participants.

One of the aspects Richard Brown wants to highlight is how Corda is focusing primarily on respecting member privacy, although only so far as to the level needed to comply with financial services requirements. In their current form, financial institutions want-  and sometimes need – to know just about everything about their customers, and it remains to be seen whether or not Corda integration can change that in the future.

R3 CEV CTO Richard Brown further explained:

There isn’t some law of nature that says the set of people who have to be in consensus is the whole world.  Bitcoin just happens to work that way because of its unique business problem.  If you don’t have Bitcoin’s business problem then be very wary of those trying to sell you something that looks like a Bitcoin solution.”

There is a point to be made of how established financial players would not benefit from using the same level of transparency found in Bitcoin. After all, consumer A does not need to see what consumer B is doing with their funds at any given time. But that doesn’t mean Bitcoin is a less viable solution to the overall financial problems consumers are facing these days, as technology can only do so much to push banks in the right direction.

Source: R3 CEV

Header image courtesy of R3 CEV

Various regulators around the world are concerned as to how the CFTC might look to hamper the growth of development and innovation in the world of blockchain technology. However, CFTC Commissioner J. Christopher Giancarlo seems to be quite keen on the concept of distributed ledgers himself, as he seems to be in favor of letting the ecosystem develop at its pace. Quite an interesting turn of events in the regulatory world, but overall, a positive sign for the digital currency ecosystem.

Also read: Bitcoin Price Watch; Bullish Start to the Week?

Blockchain Technology Growth Should Not be Harmed

There has always been a question of whether blockchain startups should worry about regulation before or after launching their business. Given how the regulatory outlook on the blockchain is in a grey area right now, something has to change to make things clearer moving forward. But that doesn’t mean innovation should be hampered, as there is no better time for stimulation of new technologies than right now.

CFTC Commissioner Giancarlo seems to agree with that statement, as he is for a “do not harm” regulatory approach to distributed ledger technology. Back when the Internet was just launched, the same route was taken by regulators to let the technology develop and mature. Fast forward to today, and it is impossible to picture the world without Internet.

That doesn’t mean there should be no set of foundational principles for the development of blockchain technology, though. The Internet was allowed to evolve through social interaction and a free market model, and that same approach should be taken to the concept of distributed ledgers. Hopefully, that should lead to the creation of new jobs, increasing productivity, and fostering consumer choice.

SEC Chairperson May Jo White stated:

“Our agency is currently considering whether certain blockchain applications may require registration as transfer agents or clearing agencies. She observed that the SEC recently reviewed the registration statement of Overstock, Inc., which is seeking to offer and sell digital securities that trade and settle entirely on the blockchain, bypassing intermediaries.”

Achieving the goal of a ‘hands-off” approach to regulating the blockchain will require cooperation across nations. Not only the United States but also foreign regulators should get together and create a principles-based approach to overseeing blockchain development. Moreover, Giancarlo feels the CFTC should revise its rules – including recordkeeping requirements – to ensure technological neutrality and avoid impeding development and innovation in this industry.

Source: Lexology

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