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R3 Blockchain Consortium Adds 12 More Banks; Will Soon Integrate Financial Services Firms

Last Updated March 4, 2021 4:46 PM
Samburaj Das
Last Updated March 4, 2021 4:46 PM

Arguably, the most talked-about private blockchain consortium around has just had twelve additional banks signing up as members to the R3-led group of global banks looking to tap into and experiment with blockchain technology for securities settlements and payments.

New York-based Fintech startup R3 has added 12 more banks as members to its blockchain consortium. The startup also revealed that it is welcoming financial firms that aren’t banks such as exchanges, clearing houses, standards bodies and infrastructure companies from Q1 2016.

The latest additions to the consortium include:

BMO Financial Group, Danske Bank, Intesa Sanpaolo, Natixis, Nomura, Northern Trust, OP Financial Group, Banco Santander, Scotiabank, Sumitomo Mitsui Banking Corporation, US Bancorp and Westpac Banking Corporation.

After the newest additions, R3 adds that the initial window for new bank members’ admittance is now closed.

By including financial firms that aren’t banks, CEO of R3, David Rutter said in a statement:

Partnering with a broad range of institutions has always been central to our strategy of developing distributed ledger technologies that will truly benefit the financial services industry as a whole.

With the initial window now concluded, a quick summary shows R3 beginning its endeavor to integrate blockchain technology with financial services this September by starting with nine banks. By the end of October, the number of participating banks had swelled to 25, with banks from Asia and Europe joining the consortium. Come late November, that number went up to 30 global banks.

Recently, R3 also announced new appointments including a former Barclays chief engineer, James Carlyle and a bitcoin core developer, Mike Hearn. The consortium now comprises of powerful backers and participants with the technical know-how in cryptography and financial markets alike.

It remains to be seen what the consortium experiments with and achieves. One possibility is developing blockchain-based toolkits that will help participating banks experiment with distributed ledgers in a sandbox environment. Another likely outcome is a private, distributed ledger platform that extends between the consortium’s members, similar to a recently launched private trading platform by NASDAQ, called Linq.

Competing Blockchains?

R3’s announcement comes within a day of the news of the IBM-led initiative, Open Ledger Project. The tech giant is looking to create an open source distributed ledger unlike R3’s effort. Notably, there are common members among both groups, such as JP Morgan and Wells Fargo.

R3 is also seen as a “commercial venture,” by a source working closely with a different blockchain group, currently under the working title ‘Post Trade Distributed Ledger Working Group, led by the London Stock Exchange (which is also participating with the IBM’s open source project). As the name indicates, the focus of this working group is on blockchain applications in post-trade processes. The source also noted that the LSE-led group has a wider cache of members, unlike R3’s participants who are all banks. However, with R3’s announcement that 2016 will allow participation from non-banking financial services firms, change is afoot.

Rutter explained:

Securing the backing of 42 of the world’s leading banks demonstrates the level of interest in our initiative, and we now look forward to exploring collaboration with non-bank institutions and expanding our already diverse group.

He also spoke about the potential of distributed ledgers, a technology that can fundamentally reshape the way the financial services industry works.

He claimed:

R3 has long believed that distributed ledger technology has the potential to impact the financial services sector the way the internet changed media and entertainment. Yes, that’s a big statement, but there is increasing evidence to support it.

Featured image from Shutterstock.