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Blue Chip Banks Opt for R3 Over SWIFT

Blue Chip Banks Opt for R3 Over SWIFT

January 21, 2016 by

canstockphoto27249809Banks with a combined market capitalization of nearly $600 billion have opted for the R3 CEV distributed ledger consortium over SWIFT’s global payment innovation initiative, introduced today.

There are 45 banks in SWIFT’s initiative, which aims to make more payments data accessible to corporate treasury departments. But R3 has scored a total of 42 members to date, and the following banks have signed on with R3 and not SWIFT’s new initiative:

  • BMO Financial Group
  • CIBC
  • Commonwealth Bank of Australia
  • Goldman Sachs
  • Macquarie Bank
  • Mitsubishi UFJ Financial Group
  • Morgan Stanley
  • Nomura
  • Northern Trust
  • OP Financial Group
  • Scotiabank
  • State Street
  • U.S. Bancorp
  • Westpac Banking Corporation

Yes, R3 and SWIFT GPI, as the new program is called, are different, but it is interesting to compare the rosters of the two payments initiatives, especially as R3 inches closer to SWIFT’s business turf. Of course, SWIFT has some big names R3 doesn’t, most notably ICICB and Bank of China, but it is surprising that SWIFT’s chief marketing officer needs to tout the participation of prominent banks as “proof of the importance of this global payments innovation initiative.”

It should be pointed out that sources tell us R3’s cost for admission is, well, “nominal” at best. But there’s a laurel to just signing up a JPMorgan Chase or Bank of America, even if no check is written to R3.

SWIFT announces that 45 leading banks have signed up to its global payments innovation initiative, announced at the end of December 2015.

The 45 participating firms include major transaction banks from Europe, Asia Pacific, Africa and the Americas. More banks are expected to join this initiative in the coming months.

Christian Sarafidis, Chief Marketing Officer at SWIFT, said: “Such strong participation from major banks all around the world is proof of the importance of this global payments innovation initiative and of their commitment to offering greater speed, transparency and predictability in cross-border payments.”

The vision of the global payments innovation initiative is to enhance cross-border transactions by leveraging SWIFT’s proven messaging platform and global reach. Together with the industry, SWIFT has created a new service level agreement (SLA) rulebook, providing an opportunity for smart collaboration between banks. In its first phase, the new service will focus on business-to-business payments. Designed to help corporates grow their international business, improve supplier relationships, and achieve greater treasury efficiencies; the initiative will enable corporates to receive an enhanced payments service directly from their banks, with the following key features:

 

  • Same day use of funds
  • Transparency and predictability of fees
  • End-to-end payments tracking
  • Transfer of rich payment information.

Wim Raymaekers, Head of Correspondent Banking at SWIFT, said: “Designed for the corporate treasurer, this initiative will enable banks to dramatically improve their customers’ cross-border payments experience. Leveraging SWIFT’s global community and the innovative application of its proven technology, the new service should find rapid adoption and make a hugely positive impact on the global payments landscape.”

The pilot of the new initiative will start from early 2016. Following the corporate cross-border payments pilot programme, SWIFT aims to incorporate additional innovations and deploy new technologies to its global payments innovation initiative. SWIFT will work together with the industry to define additional service level agreements that will cater for other client groups, further reducing the costs and frictions arising from compliance, liquidity and processing efficiency considerations involved in cross-border payments.

The banks that have signed up for the initiative are:

ABN AMRO Bank, Australia and New Zealand Banking Group, Banco Bilbao Vizcaya Argentaria, Bank of America Merrill Lynch, Bank of China, Bank of New York Mellon, Bank of Tokyo-Mitsubishi UFJ, Banco Santander, Barclays, BNP Paribas, Citibank, Commerzbank, Credit Suisse, Danske Bank, DBS Bank, Deutsche Bank, Ecobank, FirstRand Bank, HSBC, Industrial and Commercial Bank of China, ING Bank, Intesa Sanpaolo, JPMorgan Chase, KBC Bank, KEB Hana Bank, Lloyds Banking Group, Maybank, Mizuho Bank, National Australia Bank, Natixis, Nordea Bank, Oversea-Chinese Banking Corporation, Raiffeisen Bank International, RBC Royal Bank, Royal Bank of Scotland, Sberbank, SEB, Société Générale, Standard Chartered, Sumitomo Mitsui Banking Corporation, TD Bank, UBS, UniCredit, United Overseas Bank and Wells Fargo.

R3 brings eleven major global financial institutions together on a cloud based distributed ledger

Press Release

Transition from vision to execution signifies commitment to practical application of distributed ledger technology

January 20th, 2016 (New York/San Francisco/London) – Financial technology innovation company, R3 CEV, today announced the successful completion of a ground breaking distributed ledger experiment involving eleven of the world’s largest financial institutions. 

R3 and consortium member banks Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo each connected on an R3-managed private peer-to-peer distributed ledger, underpinned by Ethereum technology and hosted on a virtual private network in Microsoft Azure, the public cloud platform offering Blockchain as a Service (BaaS) in an accelerated development environment.

Participants were able to explore the technology’s potential to execute financial transactions instantaneously across the global private network. The banks simulated exchanging value, represented by tokenized assets on the distributed ledger without the need for a centralized third party.

In bringing a significant number of major banks onto a multi-lateral distributed ledger with global scale, the experiment – which was curated in the R3 Global Collaborative Labs (GCL) environment – represents a significant milestone in collaboration for the R3 consortium and a major step forward for the application of distributed ledger technology across the entire industry.

This collaborative experiment is the first in a series of projects, using a range of candidate distributed ledger technologies, and is designed to prove suitability of distributed ledgers for financial markets use cases. R3 will be announcing a series of additional projects borne out of its collaborative lab workshops over the course of 2016.

David Rutter, CEO of R3, commented: “The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets.  This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole.”

Since launching its distributed ledger consortium in September last year, R3 has been running industry collaborative joint working groups with its 42 member banks to design and deploy advanced shared ledger technology in the global financial sector, incorporating multiple open source technologies and standards. 

Several of the banks involved in the effort commented on the experiment:

“As we progress our evaluations of shared ledgers and smart contracts, we look forward to leveraging R3’s lab environment for collaborative technology experiments,” said Brad Novak, Chief Technology Officer for the Investment Bank at Barclays. “Ethereum is a well-known open source technology in this space and we also look forward to collaborative experiments using other technologies.”

“We innovate with the objective of providing effective, secure and convenient solutions to meet our customers’ needs,” said Cameron Fowler, Group Head, Canadian Personal and Commercial Banking, BMO Financial Group. “The successful completion of this experiment validates the potential of blockchain technology and we will continue to play a meaningful role in its development, along with our partners in R3.”

“Blockchain is an emerging focus for our industry and Credit Suisse. As one of the early participants with R3 we are very happy to be part of the consortium which leads the industry’s research into the value and applicability of this technology”, said Stephan Hug, Group Chief Architect, Credit Suisse. “We feel it is critical to be engaged to identify the opportunities that innovative technologies like this provide and ensure we maintain our position as a globally leading financial institution.”

“The new R3 globally accessible lab environment is enabling both R3 and member banks to collaborate technically on experiments related to shared ledger and smart contracts technology.  As demonstrated by the first project that is already up and running, this lab platform will aid faster experimentation, provide technical agility and aid learning greatly,” said Richard Herbert, CIO, Global Banking and Markets, HSBC.

“Blockchain technology represents a fundamental shift for financial services, and we think it is important to be close to the technology being developed. Natixis is glad to cooperate with R3CEV and consortium member banks to enable and accelerate this transformation with a collaborative approach. This experiment is a significant milestone to bring this technology to market and it underscores our long-standing commitment to explore technology that has the potential to greatly enhance our customers' experience”, said Olivier Perquel, Head of Financing and Global Markets for the Corporate and Investment Bank of Natixis.

Kevin Hanley, Director of Design, Services, at Royal Bank of Scotland commented: “We continue to be excited about the possibilities that blockchain offers and encouraged with the progress that we are making with others through our involvement with R3 and GCL.”

 "At TD, we have an ongoing commitment to technical innovation. To be successful, we need to collaborate in the spaces that allow us to provide continued excellence for our customers," says Jeff Henderson, EVP and CIO for TD Bank Group.  "Blockchain and R3's initial project is a sign of our industry's willingness and ability to transform; TD is playing a leadership role in shaping our industry's future."

"Proving the scale and peer-to-peer operation of blockchain experiments is an important next-step in this transformational initiative. Through connecting 11 bank labs into a simulated-real-world network, we're able to establish the platform we need to test our theories effectively in a safe environment," added Alex Batlin, UBS Senior Innovation Manager

“The kick-off of this project, within the R3 Global Collaborative Labs initiative, is another step forward for UniCredit in the evolutionary path undertaken in order to exploit the benefits of blockchain technology, which represents a powerful enabler to keep playing a leading role in the financial services arena” said Paolo Fiorentino, Deputy General Manager of UniCredit.

  

About R3

 The R3 team is made up of financial industry veterans, technologists, and new tech entrepreneurs, bringing together expertise from electronic financial markets, cryptography and digital currencies. 

 

The banks involved in the project include Banco Santander, Bank of America, Barclays, BBVA, BMO Financial Group, BNP Paribas, BNY Mellon, CIBC, Commonwealth Bank of Australia, Citi, Commerzbank, Credit Suisse, Danske Bank, Deutsche Bank, J.P. Morgan, Goldman Sachs, HSBC, ING Bank, Intesa Sanpaolo, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Natixis, Nomura, Nordea, Northern Trust, OP Financial Group, Scotiabank, State Street, Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Royal Bank of Scotland, SEB, Societe Generale, Toronto-Dominion Bank, UBS, UniCredit, U.S. Bancorp, Wells Fargo and Westpac Banking Corporation.