BlockchainBusiness & Finance

LedgerConnect For Banks Introduced!

According to the Coindesk publication, IBM and FX are easing the use of DLT servies for banks by launching an application, LedgerConnect.

The publication suggests that LedgerConnect, an initiative led by IBM and CLS was also founded by major banks such as Barclays and Citigroup. Although supported by many, usage of blockchain technology was originally taken into account 2015, the vision of CLS only. CLS first separate immature blockchain technologies to create a new platform for testing blockchain and exploring its role for numerous currencies, absent at the moment on its main platform.

Ram Komarraju, head of innovation and solution delivery at CLS, explained CLS’s current activities and flaws encountered which he suggested justified blockchain’s need. He said:

There is a lot of trade processing we do for banks and buy-side firms, without getting to the last mission-critical aspects of settlement itself.

He further added the trends and tendencies of banks to support blockchain’s necessity by saying:

Look at capital markets today, every bank has its own silo office systems even though they are trading typically with a counterparty that has the same type of business logic but using the same technology stack.

At the moment LedgerConnect app is foreseeing Hyperledger based platform that was built by IBM in past to make its apps. It is expected that LedgerConnect, a POC, will be providing a common ground for DLT servies. CLS gives its idea by seeing it as:

An asset-class agnostic platform through which an ecosystem of banks, buy- and sell-side firms and software vendors can deploy and consume services to realize operational efficiencies and cost savings in new and unprecedented ways. src:CBR

Komarraju welcomed the possibility of implementing app on some other blockchain platform. Besides this, he didn’t disapprove the use of another ledger technology given it covers security aspects needed.He said:

We are not averse to supporting other ledger implementations, whether it is R3’s Corda, whether it is Quorum (provided these techs are robust and can meet the needs we have from security perspective etc……Our expectation is that in principle we will not be limited to one technology only.

LedgerConnect is comprised of several promising attributes like it checks the affiliation of any investor  with illegal activities, secures finance against physical commodities, updates transaction info after trade and automatically corrects measurements in industrial processes. Alan Marquard, Chief Strategy and Development Officer at CLS, clarified its the aim further. He said:

LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce risk for a diverse range of firms operating in the financial markets.

The article of BigDesk states that many leading financial institutes have began working with Baton Systems, Calypso, Copp Clark, IBM and many more to sort out their PoCs. On behalf of Barclays, Dr. Lee Braine, the investment bank CTO office at Barclays, anticipates his opinions on joining with LedgerConnect. He said:

Some banks may also look to explore the more decentralized deployment option of hosting their nodes themselves…..By participating in the LedgerConnect proof-of-concept, Barclays is gaining experience of a distributed ledger private network aimed at connecting both market infrastructure-hosted nodes and bank-hosted nodes.

Although, LedgerConnect is appreciated by many banks but unfortunately PoC fatigue remains a potential hindrance for it. Beside claims made by Komarraju that LedgeConnect will be different and advanced type of PoC, trust of the banks oppositing can’t be stored. Many institutes are either waiting for LegdeConnect to prove itself or considering the option of deciding after LedgeConnect is completed. Bear accepts the existance of Poc fatigue by saying:

In many ways we are trying to get rid of that PoC fatigue…..know we have to go through a PoC to do that, but it’s kind of inevitable.

He didn’t reveal the names of institutes facing  PoC fatigue but thought of explaining the reason behind his actions.He said:

We cannot share the names of full list of banks because we haven’t (yet) received the approvals from some of them. Some of them wanted to wait until the proof of concept is complete and others needed more time for internal approvals.

Although teaming up of BM and FX Giant CLS  to launch LedgerConnect opens up world of possibilities for banks, it must be noted that problems like PoC fatigue must be resolved in order to smoothly run the flow of activities for LedgerConnect.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.