Computers giant IBM launched a blockchain platform exclusively for banking and financial services on Monday.
IBM partnered with foreign exchange services firm CLS to create LedgerConnect, a platform aimed at applying blockchain technology to numerous areas, including KYC (know-your-customer) processes, collateral management, reconciliation and market data and more.
According to a report by CNBC, LedgerConnect is designed to be a one-stop space for financial entities that want to produce blockchain applications. As a result, it is hosted on a single network.
But this can pose an issue for some banks that are working on their own such technology. There is a concern that different blockchain platforms will not be compatible with each other. So, one bank using LedgerConnect and another using its own blockchain technology might not be able to transact with each other.
As of now, nine financial companies, the likes of Citi and Barclays, have signed up for the initial test phase, or proof of concept. Although it not widely available yet, IBM said the process could be sped up following a successful proof of concept, regulatory endorsements and adequate market demand.
Blockchain is the bedrock of bitcoin. It is a public record of bitcoin-related activity and is virtually airtight. Advocates of the technology swear by it, saying it makes financial services faster and cheaper, effectively speeding up banking as a whole. In spite of this, widescale adoption is still far off.
Another version of blockchain, which is being used by large companies, is called distributed ledger technology (DLT). DLT differs from conventional blockchain in that, while the latter is a public database, DLT is private and only public within the organisation.
IBM has been focusing on blockchain and cloud technologies in order to turn the company around. The strategy appears to be working as Q2 of 2018 saw IBM’s revenue grow for the third consecutive quarter, after five years of revenue declines.