B2B Payments

In The Blockchain Race, FIs Hustle Not To Come In Last

The Bank of England caught the financial services world’s attention when its Governor, Mark Carney, spoke about the central bank’s latest initiative to revamp and rebuild its real-time gross settlement (RTGS) system.

“RTGS is being rebuilt so that new private payment systems, including those using distributed ledger, can simply plug into our system,” he stated last week. “Our new, hard infrastructure will be future-proofed to your imaginations, opening up a range of potential innovations in wholesale markets and corporate banking and retail services.”

It didn’t come as a surprise, however, considering the news last year that the central bank would restructure its RTGS system to interface with other platforms, including those build on blockchain — even though the Bank of England said blockchain was “not yet sufficiently mature to provide the core for the next generation of RTGS.”

The initiative reflects a rising sentiment among financial institutions with regards to blockchain and other disruptive FinTech: The banks may not be entirely convinced of the technology, but they don’t want to necessarily rule it out.

That can’t be said for all financial institutions (FIs), however.

This week, Spain’s Banco Bilbao Vizcaya Argentaria (BBVA), which is already a part of several blockchain alliances including Hyperledger and R3, announced a collaboration with energy conglomerate Repsol to co-develop blockchain solutions for joint corporate customers.

The first product of their partnership is a revolving credit line that uses blockchain technology, provided to an unknown company. The loan, worth about $375 million, was issued from term negotiation to signing on a distributed ledger, according to BlockTribune reports.

“The solution developed by BBVA and Repsol used different types of blockchain,” the companies said in their announcement, adding that both Hyperledger and Ethereum test network testnet were used. Altogether, the financing process took a matter of hours, the companies added.

“This operation is the fruit of BBVA’s pursuit of integrating innovative and disruptive financial products for corporate clients and to offer them the best solutions that meet their needs,” said BBVA Head of Strategy and Blockchain Alicia Pertusa in a statement.

Banks didn’t have all the blockchain fun this week, however.

Cryptocurrency company Dash revealed a collaboration with payments provider AloGateway in Asia to facilitate cross-border B2B payments using blockchain and cryptocurrencies, including Dash, bitcoin and ether. The digital currencies can be stored in AloGateway wallets, the firms explained, according to Crowdfund Insider reports.

AloGateway is fully PCI-compliant, the companies noted, and can both acquire and settle Visa and Mastercard transactions in multiple currencies. Support for cryptocurrencies is possible thanks to AloGateway’s existing partnership with BlockCypher, the company said.

“We had a number of reasons for choosing Dash as one of the first digital assets we offer on our platform,” said AloGateway CEO Sherwin Quiambao in a statement. “First, Dash has among the lowest fees and fastest transactions of any blockchain network. Dash also has an active community, particularly in parts of Asia and Europe where we are seeing a lot of potential for growth.”

Finally, Microsoft showed that FinServ is far from the only industry taking a look at how blockchain can disrupt the enterprise.

The technology conglomerate is working with consultancy EY to develop a blockchain tool to help authors, songwriters and other creative professionals manage royalty payments and content rights. Reports said the tool could be the largest enterprise network on the planet.

The solution aims to reduce the number of days it takes for artists to receive royalty payments from 45 days down to just one day, reports noted. At the heart of this innovation is the smart contract, which Microsoft said will enhance security, transparency and trust in the agreements.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.