R3 Consortium Concludes Successful Commercial Lending Blockchain Prototype

The R3 Consortium, a collaborative group of companies working to develop blockchain technologies, has completed a successful blockchain prototype for commercial lending, in partnership with four banks.

The project saw the consortium working in conjunction with ABN Amro, ING, KBC and Commerzbank to develop a model on R3’s Corda protocol, in what appears to be one of the first systems of its kind for issuing short-term commercial debt.

According to these initial trials, the system, which relies on distributed ledger technology, has been demonstrated to minimize operational risk, while reducing the costs of administration and compliance, while simultaneously making the system more transparent.

R3 and the banks are now expected to work more closely to develop the prototype into a working model, ultimately with a view to a rollout that would replace conventional systems for debt issuance.

In addition to soliciting feedback from regulators on the new system, the proponents will also seek representations from external developers and debt issuers, with a view to developing the most effective systems possible.

Ivar Wiersma, head of wholesale innovation at ING, heralded the project’s importance, pointing to its ability to remove central parties from the transactional process to improve efficiency and save on the costs and time frames of issuing short-term commercial debt.

“It eliminates the need for intermediaries like central securities depositories and custodians which slow down operations, reduce transparency and increase costs in the overall flow.”

The news will be welcomed by those following developments at R3, which has to date been regarded as one of the world’s leading blockchain development efforts.

The consortium draws over 70 members from a diverse cross-section of industry partners, mainly focusing on the potential for blockchain development in the financial services sectors.

Thought to be one of the most significant beneficiaries of the technology, financial services has to date been at the forefront of use case developments for this technology.

However, it is far from the only industry set to benefit from blockchain development. Applications are being developed across a range of different industries, including in transport and logistics, land registration, gun control and international aid.

The latest R3 developments will be welcomed by blockchain analysts and developers alike, as they strive to encourage development and uptake across financial services and beyond.