R3 CTO Says Single Global Banking Blockchain Must Be Designed from Scratch
Richard Brown, CTO of banking blockchain tech venture R3, has declared that successful, large scale blockchain technology for the global financial sector will require architecture that is designed from scratch.
Brown notes that banks currently have their own ledgers that result in duplication that is costly, leads to inconsistencies, and results in “costly matching, reconciliation and fixing of errors by and among the various parties to a transaction.” Differences between two firms’ views of the same transaction is a source of risk, potentially systemic in nature.
According to Brown, innovations in cryptographic techniques provide a new opportunity:
the possibility of authoritative systems of record that are securely shared between firms. This provides the opportunity to implement new shared platforms for the recording of financial events and processing of business logic: one where a single global logical ledger is authoritative for agreements between firms recorded on it, even though the relationships and obligations recorded remain between those firms.
The need for such a large scale global digital ledger is why Brown opines:
I believe successful, transformational, large-scale deployments of shared ledger technologies in finance depend on the adoption of an architecture that is designed from the ground up to address the functional and non-functional requirements of banks. And the non-functional requirements are really, really, exacting.
To develop the technology, Brown has hired an all start tech leadership team that includes James Carlyle, Mike Hearn and Ian Grigg.
R3 has signed up 42 global banks to develop this global ledger technology standard. The banks involved in the R3’s consortium 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.