Barclays Is First Bank In Africa To Join Global R3 Blockchain Consortium

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Written by Dana Sanchez

Johannesburg-based Barclays Africa Group has been experimenting with blockchain for some time and now it’s joining a consortium of 50 banks and financial institutions to design and deliver distributed ledger technology to global financial markets.

Absa, a Barclays subsidiary, will help develop a collaborative working group with New York-based R3 and other South African banks to develop Africa’s first blockchain banking solution, Banking Tech reported. All participating banks will share intellectual property.

The global R3 blockchain consortium is a financial innovation firm that has partnered with the world’s leading banks, Tech Financials reported. We’ve listed them below.

Financial services are a hotbed of disruptive technologies and banks across the world are are eager to embrace these to stay competitive and relevant. Many people believe blockchain technology has the potential to change financial services as profoundly as the Internet changed media and entertainment, said Tech Financials publisher Gugu Lourie.

The addition of Absa to the consortium is a significant milestone for R3, said David Rutter, CEO of R3.

Recently, R3 completed a trial of five blockchain technologies in the first test of its kind, Banking Tech reported.

The trial involved trading fixed income assets between 40 of the world’s largest banks across the blockchains, using cloud technology providers within R3’s Global Collaborative Lab.

The banks included Barclays, Deutsche and HSBC. They connected to the R3-managed private distributed ledger technologies built by Chain, Eris Industries, Ethereum, IBM and Intel.

There are more than 10 blockchain-based experiments and research initiatives being piloted within Barclays Africa, according to Andrew Baker, chief information officer for corporate and investment banking at Barclays Africa.

With industry alliances such as R3 and growing regulatory acceptance, widespread adoption will happen fast and disruptive innovation will become more mainstream, Baker said.

“Barclays Africa has been experimenting with blockchain for some time,” Baker said.

The bank has also been working with distributed ledger technology startups, FinExtra reported. In mid-2015 Barclays launched an Africa-wide blockchain supply chain challenge through its Rise open innovation initiative.

“We see huge potential for financial institutions in Africa to embrace disruptive technologies like blockchain, and use them to empower individuals and improve the lives of their customers. However, its true value will only be realized if we work together to co-develop and share solutions to common problems,” Baker said.

Barclays Africa hosted the second Blockchain and Bitcoin Africa Conference in February.

So how big is Barclays’ innovation project?

It has more than 150 people working on it, according to Simon Taylor, former vice president for entrepreneurial partnerships. Taylor worked at Barclays for three years, joining on the mobile app development side, and working his way up to VP. While he was at Barclays, he promoted awareness of innovative technologies such as blockchain, and helped set up and support the bank’s start-up accelerator, Global Trade Review reported.

Taylor has left Barclays to join 11:FS, a fintech consultancy. The Barclays innovation project no longer needs him, he told Global Trade Review. “There are more than 150 people involved, it’s got a life of its own and it will be successful,” he said.

What is blockchain?

Blockchain is a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining business processes, according to IBM, Tech Financials reported. It is a design pattern made famous by bitcoin, but its uses go far beyond:

With it, we can re-imagine the world’s most fundamental business interactions and open the door to invent new styles of digital interactions. It has the potential to vastly reduce the cost and complexity of cross-enterprise business processes. The distributed ledger makes it easier to create cost-efficient business networks where virtually anything of value can be tracked and traded—without requiring a central point of control.

The application of this emerging technology is showing great promise across a broad range of business applications.

For example, blockchain allows securities to be settled in minutes instead of days. It can also be used to help companies manage the flow of goods and related payments, or enable manufacturers to share production logs with OEMs and regulators to reduce product recalls.

The following list includes banks and financial institutions that have joined the R3 consortium:

Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, State Street, UBS, Bank of America, BNY Mellon, Citi, Commerzbank, Deutsche Bank, HSBC, Mitsubishi UFJ Financial Group, Morgan Stanley, National Australia Bank, Royal Bank of Canada, Skandinaviska Enskilda Banken, Société Générale, Toronto-Dominion Bank, Mizuho Bank, Nordea, UniCredit, BNP Paribas, Wells Fargo, ING, Macquarie Group, Canadian Imperial Bank of Commerce, BMO Financial Group, Danske Bank, Intesa Sanpaolo, Natixis, Nomura, Northern Trust, OP Financial Group, Banco Santander, Scotiabank, Sumitomo Mitsui Banking Corporation, U.S. Bancorp, Westpac Banking Corporation, SBI Holdings of Japan, Hana Financial of South Korea, and Bank Itau of Brazil. Toyota Financial Services joined June 23, 2016.