JP Morgan Chase, Credit Suisse, RBS, and Barclays among banks backing effort.
The banks of the world are taking a page from cryptocurrency. Nine of the worldâ€™s biggest financial institutionsÂ have partnered with FinTechÂ company R3 to develop distributed ledger technologiesâ€”the same technologies that underpin Bitcoinâ€™s block chain.
â€śOur bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable,â€ť said R3 CEO David Rutter in a press release.
So far, Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, J.P. Morgan, State Street, Royal Bank of Scotland, and UBS have been named as participants in the block chain scheme, but more banks are expected to join the list soon. In addition to collaborating on the underlying technologies, the group plans to establish consistent standards and protocols in order to encourage broader adoption of distributed/shared ledgers.
According toÂ Reuters, the ventureâ€™s initial focus will be deciding on an underlying architecture, as it hasnâ€™t yet been determined if Bitcoinâ€™s block chain will be used, or if the group will extrapolate from a different framework.
Itâ€™s an exciting milestone. The financial sector has long evincedÂ a strong interest in what the block chainâ€”essentially a decentralised ledger of verified transactionsâ€”can offer, especially since it could potentially help reduceinfrastructure costs by ÂŁ10-13 billion per annum. Earlier this year, Westpac Banking Corporation and the Australia and New Zealand Banking Group revealed they were testingblock chain-style technologies. Then in the UK, Barclays, which will also the first major bank to accept bitcoins, is working extensively with myriad startups to explore the ramifications of the technology.
This new initiative represents what may be one of the largest joint research efforts in the field. “Right now youâ€™re seeing significant money and time being spent on exploration of these technologies in a fractured way that lacks the strategic, coordinated vision so critical to timely success,” said Royal Bank of Scotland director Kevin Hanley. â€śThe R3 model is changing the game.”