Bank of Ireland completes blockchain test

Bank of Ireland headquarters on Mespil Road, Dublin 4

The Bank of Ireland – one of the “Big Four” commercial banks in Ireland – and Deloitte have successfully completed an experiment with blockchain technology, using it as a means of tracing transactions in keeping with Markets in Financial Instruments repealing Directive (MiFID II) regulations, reports Silicon Republic.

David Tighe, who leads innovation at the bank, told the Irish publication that the trial took place to demonstrate how financial institutions can use blockchain technology on top of traditional legacy systems.

He said full implementation would make it impossible to modify transaction histories and will meet European Union rules like the MiFID II, which comes into effect in 2018.

Tighe told Silicon Republic that the trial’s purpose was to understand blockchain technology and assess how it can fit with the bank’s legacy systems as a layer on top.

“We see this as the start of a new concept, just like experimenting with TCP/IP (Transmission Control Protocol/Internet Protocol) in the early days of the internet,” Tighe said. “It may not end up like this but we see a strong technology that can help with transparency in transactions.”

He added, “Crucially, it has to meet regulatory requirements. It is the underlying technology that fascinates us and it could one day be an efficient way of transacting value between people and at the same time leave a transparent trail of information.”

The proof-of-concept entailed the transaction of data rather than actual money, said Stephen Moran, Bank of Ireland’s innovation manager, to Silicon Republic.

“The next obvious step is transmission of value and scalability,” Moran said. “One of the biggest issues with cryptocurrencies is latency, which is seven transactions a second. But the underlying blockchain technology could be harnessed and scaled to 20,000 transactions a second by a bank.”

“For now,” added Moran. “This was more of a test of the data, how it can be tracked and logged and how it would work with a bank’s legacy systems, fulfillment and contact centres. While blockchain technology can be seen as disruptive, it can actually complement a bank’s legacy systems.”

Silicon Republic reported that the experiment combined synthesized data from multiple systems across the bank’s Global Markets division and associated functions to create an immutable, distributed, searchable repository of information across the full trade cycle.

Browser-based views were created for clients, relationship managers and the regulator to offer enhanced views of trade position with the ability to perform near real-time auditing.

“The trial demonstrates the disruptive impact that blockchain can have on the financial services industry, and the positive results that this disruption can bring,” said David Dalton, partner and head of financial services at Deloitte, which worked with Bank of Ireland throughout the test. “We are excited to have developed this proof of concept with Bank of Ireland, and believe that this can be built upon further to capitalise on the wealth of blockchain technology-based opportunities.”

Discussing the proof-of-concept trial, Tighe said in a press release the bank sent to CoinReport, “Bank of Ireland is constantly investigating how technology and innovation can improve the customer experience, while also ensuring that systems and procedures address changes in regulatory requirements being introduced across Europe. We are pleased with how our research with Deloitte has progressed to date and we look forward to bringing it to the next stage as we explore how it can be integrated further.”

Image credit – Cqui  (CC BY-SA 3.0)