Nine financial institutions have joined IBM and foreign exchange settlement provider CLS to begin testing a blockchain-based application platform. Called LedgerConnect, the platform will make available services and applications from different vendors in areas such as collateral management, sanctions screening, and customer compliance checks. The platform, LedgerConnect, is similar to consumer app stores and will seek to make it cheaper and easier for financial institutions to utilize software based on blockchain technology. Because of the security and efficiency benefits offered by the system, many banks have begun testing blockchain-based applications but few have gone into production. CLS and IBM hope that the LedgerConnect platform will help speed up the rate of adoption.
Barclays Plc and Citigroup Inc are two of the nine financial institutions that will be involved in the testing. In an email, Lee Braine from the chief technology office at Barclays, said that "Barclays is participating in the LedgerConnect proof-of-concept so we can gain an understanding and experience of a new network for blockchain applications – and also test some candidate use cases on that network."
The development and testing of individual applications by banks is quite costly and time consuming. According to Alan Marquard, chief strategy and development officer at CLS, one of the benefits of a shared platform run by an "existing market structure provider" is that applications from different vendors can be vetted to ensure they meet the financial institutions' security and technology standards. IBM and CLS aim to make the platform widely available to the industry after testing is concluded (if there is enough market demand to do so).
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