Executives leading the charge for the adoption of cutting-edge blockchain technology in the banking sector concede that the Covid-19 pandemic has thrown a spanner in their works, one they hope will be temporary.
David Rutter, chief executive of R3, a blockchain developer working for a number of big banks, said “the velocity of the work is going to be impacted by this, like almost everything else”. But he sees a silver lining in the capacity of crises to “drive the type of radical change that we’re trying to promote”.
Blockchain, a software system originally developed to underpin the bitcoin cryptocurrency, consists of a networked ledger equally and anonymously accessible by all its users. Its proponents in the banking sector believe it can also underpin established markets such as trade finance, and bring significant cost-savings and efficiencies.
R3, launched in 2015 as a consortium of banks, is one of the most successful blockchain start-ups. In March 2019, R3 began working with Six, operator of the Swiss stock exchange, to develop its digital-asset exchange. In December, a start-up named HQLAX and Deutsche Börse, the stock exchange group, launched a blockchain platform underpinned by R3’s blockchain, Corda, to facilitate collateral swaps in the securities lending market.
But wider take-up of the still-nascent technology is unlikely while markets are in crisis, executives fear.
Fnality, another start-up that hopes to speed payments in wholesale banking markets using its “utility settlement coin”, discussed the potential for a slowdown in blockchain adoption at an all-hands meeting yesterday, according to its chief commercial officer, Olaf Ransome.
Ransome told Financial News the pandemic is best characterised as “a minor speed bump”.
He said: “These types of things are always a distraction as banks work to organise themselves. Inevitably, anything discretionary will always take a hit in these kinds of moments.” The virus does not…