Tech giant IBM and forex settlement provider CLS are collaborating in testing a platform known as LedgerConnect that will make it possible for banks, software vendors, and fintech firms to deploy, share, and consume blockchain-based software. The platform was developed by IBM in partnership with Hyperledger. Banking giants Barclays and Citi are among two of the nine financial institutions that are taking part in the proof of concept (PoC).
LedgerConnect will serve as a blockchain marketplace for the financial sector, and this is expected to speed up innovation in the ecosystem. According to CLS’s chief strategy and development officer, Alan Marquard, LedgerConnect will offer safe and robust solutions which will cut costs while reducing risk.
No Application Development Expenses
This is because banks will be able to reduce spending on technology and operations as they will now be in a position of sharing services on a network rather than allocating resources to application development.
LedgerConnect – Providing financial institutions with access to DLT-based services hosted on a shared distributed ledger network to realize operational efficiencies and cost savings. #DLT#[email protected]://t.co/hshBYqknf6
— CLS Group (@CLSGroup) July 31, 2018
LedgerConnect will be restricted to Hyperledger Fabric-specific applications though support for other technologies such as R3’s Corda, Quorum, or even the public Ethereum blockchain might be offered in future.
“Operating on a private permissioned network based on the IBM Blockchain Platform and Hyperledger Fabric technology, LedgerConnect will be designed for regulated and security-conscious enterprises and available across asset classes. Support for additional ledger technologies may be provided in the future, based on market demand and developments,” read a statement released by IBM.
Tried and Tested
According to the Armonk, New York-based IBM security and performance tests are conducted on the blockchain apps before certification. While financial institutions will benefit from a marketplace where they can obtain blockchain apps that have already been tested, vendors, on the other hand, will have a platform on which to distribute their products. This includes fintech startup such as Synswap, which graduated from a Barclays accelerator earlier this year.
Some of the blockchain-based services and apps that will be available on LedgerConnect will focus on areas such as market data, derivatives post-trade processing and reconciliation, collateral management, sanctions screening, and Know Your Client (KYC) processes.
Existing Blockchain Apps
A few apps have already been made available, and these include the margin management and collateral apps of Openrisk and a portfolio reconciliation tool from Synswap. There are also other applications that are being piloted, including a KYC app that IBM developed, as well as a sanctions-screening app that was created by mPhasis.
Other software vendors that are participating in the proof of concept include Persistent Systems, Copp Clark, Caypso and Baton Systems. Once the PoC has been successfully completed and the necessary regulatory approvals have been granted, IBM and CLS intend to expand the availability of the apps platform in the industry.
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