Citi has implemented what it calls a “blockchain-inspired” distributed ledger technology in its back-office to manage collateral in its ledger and send cash or securities, the financial institution (FI) announced Friday (Dec. 15) in a press release.
The bank implemented the distributed ledger platform with CME Group in an effort to accelerate settlement of collateral.
“The blockchain-inspired software could materially reduce the cost of back-office operations and speed up margin funding times,” Citi said. “Currently, 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 software enables Citi to view data in real time and receive immediate acknowledgment of cash or securities sent to a clearing house.
“This technology allows us to eliminate manual touch points, reduce email traffic, and avoid logging into multiple portals,” explained Stephen Marx, Citi’s head of futures, clearing and collateral operations, in a statement. “The capabilities in the funding and collateral space create efficiency and improve productivity for our clients.”
The platform was developed by Baton Systems, whose CEO, Arjun Jayaram, stated it could be used by FIs regardless of the existing technologies they have in place.
“This innovative real-time payments platform is immediately scalable across any financial institution, exchange or clearing house to deliver sizable operational and cost efficiencies,” Jayaram said. “Its beauty is its simplicity, leveraging the most useful elements of blockchain, while introducing interoperability and extensibility to easily fit with existing technology ‘rails’ and business processes.”
Baton Systems said it is exploring other ways to deploy the platform, including to enable businesses to access distributed ledgers.
Earlier this year, Citi’s Treasury and Trade Solutions unit announced a partnership with Nasdaq to explore the use of blockchain in corporate payments using Chain’s Chain Core distributed ledger platform. Citi also previously launched CitiConnect for Blockchain, a way to link Citi’s existing payment technologies into blockchain infrastructure.