Although by this point most major financial institutions are exploring blockchain and distributed ledger technology (DLT) initiatives, and have even built solutions leveraging the technologies, so far these products have languished in a contained testing or proof of concept (POC) environment, and the prospect of taking them live seemed distant.
Now, however, there are indications that FIs are finally moving beyond the POC stage.
- BNP Paribas Securities Services is preparing to scale its securities solution. The French bank’s securities subdivision and SmartAngels, an equity crowdfunding company, announced the successful live testing of a blockchain-based securities trading platform. The platform automates the mandatory updating of a company’s share register by automatically recording securities issued by the organization, and who buys them, on a distributed ledger. The aim is to make share issuing easier for companies, and secondary markets more accessible for their investors. The tests included one BNP Paribas Securities Services client company, and four SmartAngels customers. BNP said the partners will now begin scaling the platform by signing on more users, with a view to taking it live. No launch date has been set, but this is a promising step toward real-world usage.
- Natixis executed a live transaction on a blockchain. Giant French asset manager Natixis successfully sold shares in its funds to investors through a blockchain-based fund distribution platform, FundsDLT. The platform works by allowing investors to submit their share orders using the FundsDLT app, with the details automatically uploaded to the platform. The transaction is then confirmed by a transfer agent, triggering clearing and settlement processes, which all happen within the solution. The platform also sends updates to Natixis and all other involved parties. FundsDLT was jointly developed by Luxembourg Stock Exchange subsidiary Fundsquare, PostGroup subsidiary InTech, and KPMG Luxembourg. Although the transaction had limited scope, it serves as a live use case, so the parties can now focus on scaling.
These developments will probably push other FIs to speed up the rollout of their blockchain solutions. Scaling is essential to achieving the network effect necessary for a blockchain-based solution to be impactful, which means organizations that get their products to market fast and attract multiple users will stand a better chance of establishing their solution’s dominance. That BNP and Natixis are now focusing on attracting users will likely push their slower peers to also move their blockchain solutions beyond the POC bubble. As such, we’re likely to see fewer announcements of new blockchain POCs, and more instances of scaling with live clients.
- Outlines banks’ experiments with blockchain technology.
- Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews.
- Discusses the likely trends that will emerge in the technology over the next several years.
- Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.
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