Royal Bank of Canada using blockchain for U.S./Canada payments

Royal Bank of Canada is experimenting with blockchain to help move payments between its U.S. and Canadian banks, one of the bank’s senior executives told Reuters on Thursday.

Martin Wildberger, RBC’s executive vice president for innovation and technology, said use of distributed ledger technology, or DLT, would improve the speed of payments, reduce complexity and lower costs.

The bank developed the system over the past six months at an RBC blockchain technology center in Toronto, deploying software developed by a cross-industry open-source blockchain consortium known as Hyperledger.

The technology was integrated into RBC’s existing systems several weeks ago as a “shadow” to RBC’s primary ledger, letting the bank monitor payments in real-time as they travel between the United States and Canada, he said.

“We wanted to set it up as a shadow ledger so that we can demonstrate our leadership in exploiting that technology while at the same time recognizing that the technology is still early in its adoption phase,” Wildberger said.

A growing number of senior bankers have said they believe that blockchain technology it will eventually revolutionize the way payments are made across the industry, reducing complexity and costs of back-office processes.

“Everybody recognizes blockchain will be transformative and critical,” said Wildberger. “At the same point in time, I think everybody recognizes these are early days.”

RBC is looking to use blockchain to improve its rewards and loyalty offers and trade finance capabilities, he said.

Canada’s central bank said in May that it had decided against using blockchain to provide the underlying infrastructure for the country’s interbank payment system after a year-long investigation, saying “too many hurdles” had to be overcome to make the approach viable.

Source: Reuters