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One City Plans To Run Entirely On Blockchain

As more businesses join collaborative groups and invest in internal research and development (R&D) to explore using blockchain for new services, some firms have begun to use the technology themselves. This week, news from Citigroup, UPS and Vanguard signal interest in using the distributed ledger technology in the back office. Plus, in this week’s Blockchain Tracker, PYMNTS takes a look at how governments continue to consider the tool, with one city aiming to be the first government that runs entirely on blockchain by the end of the decade.

 

Citigroup

As the financial institution (FI) explores blockchain to integrate into its services, Citigroup has reportedly begun using distributed ledger technology in its own back office. The company announced this week that it deployed a “blockchain-inspired” technology to manage collateral in its ledger and facilitate the sending of cash and securities.

The implementation occurred in partnership with CME Group and, according to Citi, the software “could materially reduce the cost of back-office operations and speed up margin funding times.”

“Currently,” Citi explained in its announcement, “banks have to set aside capital as they wait for collateral to be settled. This platform could potentially free up billions of dollars in capital if trade times can be reduced from days to seconds.”

The distributed ledger platform was developed by Baton Systems. Its CEO, Arjun Jayaram, noted that the solution can be used by any FI for real-time payments and settlement. The company is currently examining other use cases for the platform.

 

UPS

Logistics giant UPS announced it is joining the Blockchain in Transport Alliance (BiTA), a consortium that explores the use of blockchain for the freight industry.

“It has multiple applications in the logistics industry, especially related to supply chains, insurance, payments, audits and customs brokerage,” said UPS Director of Enterprise Architecture and Innovation Linda Weakland, according to TechCrunch. “The technology has the potential to increase transparency and efficiency among shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders.”

The BiTA announced in October that it added shipping financial services firm eCapital to its group as well, signaling that the consortium will certainly be focusing on how to use blockchain to facilitate not just the transport of goods, but also the movement of money and financial documents in the global trade and logistics market.

 

Vanguard

Mutual fund conglomerate Vanguard is reportedly readying to implement blockchain into its own processes early next year. CoinDesk reports said the firm will use smart contract and blockchain technology created by Symbiont to streamline data aggregation from the Center for Research in Security Prices at the University of Chicago’s Booth School for Business. That data includes company names, share counts and corporate activity like mergers and acquisitions (M&A), reports said.

Blockchain could accelerate the movement of data from the research center to Vanguard; according to the companies, the project will begin in early 2018.

“Using this platform, investment managers will be able to instantly distribute, receive and process index data, resulting in better benchmark tracking and significant cost savings that potentially results in better returns for our clients,” explained Vanguard Investment Management Group Principal Warren Pennington in a statement.

 

Governments’ Blockchain Moves

Last week, PYMNTS noted Gibraltar’s plans to introduce blockchain regulation into its financial services space. The nation’s Financial Services Commission (GFSC) wants to create a licensing system for blockchain startups in the market. This week, the GFSC’s Head of Risk and Innovation Nicky Gomez said Gibraltar’s move is one the industry needs.

“This is the first instance of a purpose-built legislative framework for businesses that use blockchain or a distributed ledger technology,” Gomez said, according to reports in CoinTelegraph. “Many firms have been craving for a jurisdiction to regulate them.”

Other governments may not be entirely ready for blockchain regulation just yet, but some have made new progress in using the technology.

Reports in BlockchainTribune this week said the government of West Bengal in India is planning to use blockchain to enhance the security of government documents. The project, developed by the Cyber Security Centre of Excellence, is working to enhance cybersecurity expertise among law enforcement, academic professionals and other government professionals, and storing documents on blockchain would be part of its initiative to prevent cyberattacks, reports said.

Dubai is taking blockchain a step further with plans to become the world’s first government powered by the technology.

Reports in Forbes said the city aims to have all visa applications, government bill payments and license renewals to be facilitated using blockchain. The publication said these processes amount to more than 100 million documents every year. Dubai is working with Smart Dubai to explore other potential areas of government that could be transformed by the tool; according to the group, blockchain could lead to $1.5 billion in savings every year.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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