And IBM says it is also designed to reduce the settlement time and lower the cost of completing global payments for businesses and consumers – and using it in collaboration with technology partner Stellar.org and KlickEx Group the solution is intended to improve the speed with which banks both clear and settle payment transactions on a single network in near real time.
IBM says the solution is already processing live transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand and the UK, and using a blockchain distributed ledger, all appropriate parties have access and insight into the clearing and settlement of financial transactions.
The solution is run from the IBM Blockchain Platform on Hyperledger Fabric and was built in collaboration with Stellar.org, a non-profit organisation and associate member of Hyperledger, and KlickEx Group, a regional financial services company in the Pacific region.
National Australia Bank has been included in an initial group of diverse banks as part of the development and deployment process which also includes Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, Rizal Commercial Banking Corp. Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw (HK) of WorldCom Finance, and other financial institutions.
“With the guidance of some of the world’s leading financial institutions, IBM is working to explore new ways to make payment networks more efficient and transparent so that banking can happen in real-time, even in the most remote parts of the world,” said Bridget van Kralingen, senior vice-president of IBM Industry Platforms.
“Making distributed ledger technologies more interoperable is the latest example of IBM’s leadership driving the rapid advancement of blockchain.”
"TD Bank is pleased to participate along with fellow banking leaders to observe how IBM Blockchain can support more secure and effective payments solutions," said Rizwan Khalfan, executive vice-president and chief digital and payments officer, TD Bank.
"We're focused on innovation that adds value for our customers and our business, and blockchain presents a tremendous opportunity to transform and enhance payment systems, enabling us to continue to evolve the products and services we can offer."
According to Jed McCaleb, co-founder of Stellar, the innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole.
"We are using blockchain technology in production to facilitate cross-border payments in multiple integrated currency corridors. Currently, cross-border payments tend to take up to several days to clear,”said McCaleb.
“This new implementation is poised to start a profound change in the South Pacific nations, and once fully scaled by IBM and its banking partners, it could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations."
IBM says it will continue to advance the solution with the goal of expanding capabilities in order to support central bank-issued digital currencies, securities, bonds and structured financial assets.