40 major banks test blockchain technology for financial services

On Thursday, financial technology firm R3 CEV announced that is has finalized a trial in which 40 banks part of its consortium tested five different blockchains to issue, trade and redeem a fixed-income product, reported Forbes.

R3 believes this is the largest test of blockchain technology in a real-world process in the financial markets.

“This development further supports R3′s belief that close collaboration among global financial institutions and technology providers will create significant momentum behind the adoption of distributed ledger solutions across the industry,” said R3 chief executive said in a statement, as reported by Forbes. “These technologies represent a new frontier of innovation and will dramatically improve the way the financial services industry operates, in much the same way as the advent of electronic trading decades ago delivered huge advancements in efficiency, transparency, scalability and security.”

R3 tested five blockchains, provided by Chain, Eris Industries, Ethereum, IBM and Intel. Forbes reported that each bank assessed how well each distributed ledger ran smart contracts that helped issue, secondarily trade and redeem commercial paper, a kind of fixed-income security corporations issue to raise short-term funds, for instance in the need of capital to buy inventory.

The magazine said the blockchains were hosted on cloud computing resources provided by Microsoft Azure, Amazon AWS and IBM Cloud.

Forbes reported that in addition to its consortium, R3 is developing new software that can serve as a standard communication layer that would allow different blockchains, such as Chain’s private one and Ethereum’s public one, to interact with each other. The firm also has a lab where member banks can conduct controlled experiments on blockchain technology, and in the future, it plans to offer commercial applications that would, for example, decrease the cost of post-trade processing, settlement, payments and so on.

Image via R3 CEV’s earlier press release