B2B Payments

Blockchain’s Whirlwind Month – So Far

Bitcoin has struggled a bit to gain legitimacy in the global market. Its underlying technology, the blockchain, has had far more success, largely thanks to major financial institutions that have made major investments in the technology.

In the last few weeks alone, there has been a flurry of mainstream attention being paid to the blockchain, an open ledger that can record transactions made in bitcoin or other currencies.

In other words, the blockchain just might have the opportunity to take off and change the way global, corporate payments are done, whether its sibling, bitcoin, comes along for the ride or not.

“The world is ready,” said Adam Draper, the managing director of blockchain-focused venture capital firm Boost VC, in a recent interview with PYMNTS. “All the largest institutions are experimenting with blockchain technology,” he added. “The technology itself has become useful rather than speculative.”

[bctt tweet=”‘The blockchain itself has become useful rather than speculative.’ – Boost VC”]

Boost VC was largely ahead of the pack when it came to blockchain investment. Earlier this month, the company revealed how much it has spent on blockchain and bitcoin innovators since its 2012 launch: $52 million, far greater than earlier estimates of $6.6 million.

Among the startups it’s backed is Align Commerce, which Draper pointed out as an MVP in cross-border B2B payments innovation. The startup, which also emerged from Boost VC’s Tribe 4 accelerator, nabbed funding from Boost VC and other backers earlier this year.

At the time, Align Commerce CEO Marwan Forzley told reporters that the seed investment served as support “of a very interesting use case, which is payment processing on the blockchain.” Draper told PYMNTS that innovators and financial institutions are now recognizing that this application of the technology can touch upon nearly any industry – real estate, finance, foreign exchange, “anywhere there are payments,” he said.

“It is a revolutionary technology that will fundamentally change the way the world transacts,” Draper added. “Suddenly, sending money internationally can settle instantly for half the cost rather than take five days to settle.”

Boost VC may have been an early backer of the blockchain, but these days, household names in traditional banking are jumping on board, too.

This week, U.K. bank Barclays was reported to have inked contracts with two startups innovating in the space, both of which are also graduates of the institution’s accelerator program. The startups, Chainalysis and Wave, are both seeking unique B2B applications for the technology, with Chainalysis providing cybercrime protection for banks and their corporate clients that want to transact using the blockchain, and Wave looking at how the blockchain can put an end to paper-based payments – another hot topic in B2B payments.

Only days before, BNY Mellon waved its own flag in support of blockchain technology with its report, “Innovation in Payments: The Future is FinTech.” The paper explored how traditional banks, with their market position and access to assets, are in a unique position to partner with blockchain innovators and lead the global market in disrupting global B2B payments with the technology.

“The impact and usage of digital currencies on wholesale payments have been far less noticeable than in the retail payments sector,” BNY Mellon said, “yet this is likely to change as cryptocurrencies become viewed less as stores of value and more as a means of reducing friction within the payments process.”

Both BNY Mellon and Barclays have stepped onto the path of partnering with smaller players to propel this effort. In fact, the two are part of dozens of major financial institutions, including Goldman Sachs, RBS, Bank of America and JPMorgan, which signed on to back startup group R3 and its mission to launch real-world applications for the blockchain.

Another innovator group, Ripple, is also teaming up with banks to experiment with its new Interledger protocol (ILP). Already, Ripple said this week, 30 unnamed banks are using the ledger intermediary tool, a solution to ease cross-border payments settlements friction for global financial institutions. Days prior, Santander Bank’s investment arm placed $4 million into Ripple’s Series A investment round.

And still, more groups continue to initiate blockchain-centric ventures, be it independent groups like Innovate Finance, or banks like BNY Mellon and UBS which, in addition to partnering with these innovators, are launching their own solo blockchain expeditions.

With such significant developments in big-time support for the blockchain in this month alone, Boost VC’s Draper says it’s definitely time for the technology to take off.

“We are entering a new era of the blockchain where it will get legitimized by the current financial institutions,” he said, “and then mass adoption will take place.”

[bctt tweet=”‘We are entering a new era of the blockchain’ – Boost VC”]

He added that it’s inaccurate to think that the global market will still have to see some changes to be ready for blockchain technology to be the norm and for banks and corporations to begin realizing the impact of the blockchain on cross-border B2B payments. “It’s happening,” Draper said.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.