Major global financial institution complete the first blockchain proof-of-concept test

Financial technology innovation company, R3 CEV, announced the successful completion of a ground breaking distributed ledger experiment involving eleven of the world’s largest financial institutions.

R3 and consortium member banks Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo each connected on an R3-managed private peer-to-peer distributed ledger, underpinned by Ethereum technology and hosted on a virtual private network in Microsoft Azure, the public cloud platform offering Blockchain as a Service (BaaS) in an accelerated development environment.

„Participants were able to explore the technology’s potential to execute financial transactions instantaneously across the global private network. The banks simulated exchanging value, represented by tokenized assets on the distributed ledger without the need for a centralized third party.”, according to a press release.

In bringing a significant number of major banks onto a multi-lateral distributed ledger with global scale, the experiment – which was curated in the R3 Global Collaborative Labs (GCL) environment – represents a significant milestone in collaboration for the R3 consortium and a major step forward for the application of distributed ledger technology across the entire industry.

This collaborative experiment is the first in a series of projects, using a range of candidate distributed ledger technologies, and is designed to prove suitability of distributed ledgers for financial markets use cases. R3 will be announcing a series of additional projects borne out of its collaborative lab workshops over the course of 2016.

David Rutter, CEO of R3, commented: “The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets. This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole.”

Since launching its distributed ledger consortium in September last year, R3 has been running industry collaborative joint working groups with its 42 member banks to design and deploy advanced shared ledger technology in the global financial sector, incorporating multiple open source technologies and standards.

Several of the banks involved in the effort commented on the experiment:

“We innovate with the objective of providing effective, secure and convenient solutions to meet our customers’ needs,” said Cameron Fowler, Group Head, Canadian Personal and Commercial Banking, BMO Financial Group. “The successful completion of this experiment validates the potential of blockchain technology.”

“The new R3 globally accessible lab environment is enabling both R3 and member banks to collaborate technically on experiments related to shared ledger and smart contracts technology. As demonstrated by the first project that is already up and running, this lab platform will aid faster experimentation, provide technical agility and aid learning greatly,” said Richard Herbert, CIO, Global Banking and Markets, HSBC.

“Blockchain technology represents a fundamental shift for financial services, and we think it is important to be close to the technology being developed.  This experiment is a significant milestone to bring this technology to market”, said Olivier Perquel, Head of Financing and Global Markets for the Corporate and Investment Bank of Natixis.

Kevin Hanley, Director of Design, Services, at Royal Bank of Scotland commented: “We continue to be excited about the possibilities that blockchain offers and encouraged with the progress that we are making with others through our involvement with R3 and GCL.”

„Proving the scale and peer-to-peer operation of blockchain experiments is an important next-step in this transformational initiative. Through connecting 11 bank labs into a simulated-real-world network, we’re able to establish the platform we need to test our theories effectively in a safe environment,” added Alex Batlin, UBS Senior Innovation Manager

“The kick-off of this project, within the R3 Global Collaborative Labs initiative, is another step forward for UniCredit in the evolutionary path undertaken in order to exploit the benefits of blockchain technology, which represents a powerful enabler to keep playing a leading role in the financial services arena” said Paolo Fiorentino, Deputy General Manager of UniCredit.

About R3
The R3 team is made up of financial industry veterans, technologists, and new tech entrepreneurs, bringing together expertise from electronic financial markets, cryptography and digital currencies.

The banks involved in the project include Banco Santander, Bank of America, Barclays, BBVA, BMO Financial Group, BNP Paribas, BNY Mellon, CIBC, Commonwealth Bank of Australia, Citi, Commerzbank, Credit Suisse, Danske Bank, Deutsche Bank, J.P. Morgan, Goldman Sachs, HSBC, ING Bank, Intesa Sanpaolo, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Natixis, Nomura, Nordea, Northern Trust, OP Financial Group, Scotiabank, State Street, Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Royal Bank of Scotland, SEB, Societe Generale, Toronto-Dominion Bank, UBS, UniCredit, U.S. Bancorp, Wells Fargo and Westpac Banking Corporation.