TORONTO - 16 Oct 2017: SIBOS[1]: IBM (NYSE: IBM) today announced a new blockchain banking solution that will assist financial institutions to address the processes of universal cross-border payments, intended to reduce the settlement time and reduce the cost of making global payments for businesses and consumers. Using IBM Blockchain, and in collaboration with technology associates Stellar.org and KlickEx Group, the solution is designed to increase the speed in which banks both clear and settle payment transactions on a single network in near real time.
Stellar (XLM) cryptocurrency price has risen 110% in the last 24hours, in the wake of the announcement.
According to the World Bank,
initiatives to modernize payments and provide financial access could improve the flow of currency and commerce, and help achieve the goal of extending financial services to one billion people by 2020*.
The solution is already processing live transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand, and the United Kingdom.
IBM has convened an initial group of several banking leaders as part of the development and deployment process, including Banco Bilbao Vizcaya Argentaria, Bank Mandiri,Bank Danamon Indonesia, Bank Negara Indonesia, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group,Bank Permata, National Australia Bank, Rizal Commercial Banking Corp. (RCBC) Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw (HK) of WorldCom Finance, and other financial institutions.
“With the guidance of some of the world’s leading financial institutions, IBM is working to explore new ways to make payment networks more efficient and transparent so that banking can happen in real-time, even in the most remote parts of the world,”
said Bridget van Kralingen, Senior Vice President of IBM Industry Platforms.
“Making distributed ledger technologies more interoperable is the latest example of IBM’s leadership driving the rapid advancement of the blockchain.”
In keeping with IBM's commitment to open source, the solution is run from the IBM Blockchain Platform on Hyperledger Fabric and was built in collaboration with Stellar.org, a non-profit organization and associate member of Hyperledger, and KlickEx Group, a regional financial services company in the Pacific region.
Stellar is an open-source blockchain network that is purpose-built for the issuance and exchange of digital assets. Digital assets are issued on the Stellar network as a foreign exchange bridge to allow for near real-time settlement. KlickEx Group serves as the founding financial institution for the region, servicing banks, retail clients, and consumers using this new network.
IBM will continue to advance the solution with the goal of expanding capabilities to support central bank-issued digital currencies, securities, bonds, and structured financial assets. IBM Blockchain provides high-performance orchestration to move payments among parties. Each payment is immutable once written, and settlement instructions are provided via smart contracts on Hyperledger Fabric.
Initially, Stellar will provide the network and digital asset to facilitate the settlement of transactions cleared on Hyperledger.
"This innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole,"
said Jed McCaleb, co-founder of Stellar.
"We are using blockchain technology in production to facilitate cross-border payments in multiply integrated currency corridors. Currently, cross-border payments tend to take up to several days to clear. This new implementation is poised to start a profound change in the South Pacific nations, and once fully scaled by IBM and its banking partners; it could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations."
This production blockchain network with KlickEx and Stellar is one of many blockchain projects underway by IBM in financial services including foreign exchange payments netting, private equity administration, securities lending and trade finance.
[1]Sibos, is an annual banking and financial conference organized by the Society for Worldwide Interbank Financial Telecommunication, hosted in Toronto this year