Software company R3 has partnered with 22 of its member banks to create an international payment system based on distributed ledger technology (DLT), the firm announced in a press release Tuesday. A prototype of the solution will be out by the end of this year.
DLT is based on blockchain, the ledger technology that underpins Bitcoin, along with a host of other technologies. The goal of the new solution is to provide a safe and secure way to speed international payments and improve cross-border business, the release said.
Certain domestic systems already provide real-time payments in many countries, but that isn't the case when it comes to international transactions. Often these payments can take days to complete, which slows down trade and increases the risk of fraud, the release said.
SEE: IT leader's guide to the blockchain (Tech Pro Research)
The payments system will be built on R3's Corda DLT platform, which was designed with financial services in mind. One of the core value propositions is that the new system relies on shared infrastructure and will help to facilitate the full payments workflow.
"The solution works by creating a representation of fiat currencies on ledger, and is programmed to enable interaction with central bank digital currencies as they are rolled out," the release said. This will make it easier for domestic systems to fold the capabilities of R3's offering into their current systems.
"International payments systems have struggled to keep pace with the explosion of global trade and the globalisation of the world's markets," R3 CEO David E. Rutter said in the release. "This marks a significant milestone for distributed ledger technology as we work alongside our bank members to harness its unique attributes to build the world's first true international payments system."
R3 currently works with more than 100 banks and financial institutions internationally. The 22 involved in this project include Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank, TD Bank, US Bank, and Woori Bank, among others.
"In our view, R3's proposal is very promising, because it is built on the right approach, relies on Corda, and sets the project on a path which is relevant - notably by anticipating right out of the gate how the proposed architecture could be adapted when central bank digital currencies appear," Frederic Dalibard, head of digital for corporate and investment banking at Natixis, said in the release.
IBM also recently announced its own blockchain banking solution, which allows financial institutions to more quickly and cost effectively process payments across international borders as well.
The 3 big takeaways for TechRepublic readers
- R3 has partnered with 22 member banks to create a cross-border payment system that is built on blockchain-like technology.
- The solution will provide real-time international payments, and can be integrated with existing domestic solutions already in place at the partner companies.
- The payment system is built on R3's CLT platform, Corda, and relies on shared infrastructure to facilitate workflows.
- The executive's guide to implementing blockchain technology (TechRepublic)
- Yes, Blockchain could reverse the course of civilization and upend the world's most powerful companies (ZDNet)
- The Complete Ethereum Blockchain Mastery Bundle (TechRepublic Academy)
- New alliance advocates the blockchain to improve IoT security, trust (ZDNet)
- Blockchain: The smart person's guide (TechRepublic)
Conner Forrest has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.