IBM has announced this week that it teamed up with CLS, a US-based financial services company in a move to provide the perks of an interactive ecosystem and network effects for private permissioned blockchains. This partnership seeks to bring distributed ledger technology (DLT) to the doorstep of financial institutions by providing them with a blockchain app store offering finance-based blockchain applications created by FinTech companies and software developers.
Dubbed LedgerConnect, IBM and CLS pet project is already seeing adoption by well-established multinational banks including Barclays, CitiGroup and seven other participating banks that have chosen not to go public yet. These banks worked with CLS to develop the LedgerConnect protocols and will act as validators for the applications that will run on it.
LedgerConnect functions as a proof-of-concept venture which provides financial institutions with access to services such as sanctions screening, market data, derivatives post-trade processing and reconciliation, KYC processes, and collateral management. By design, LedgerConnect serves as a platform to enable software companies, FinTech vendors, buy and sell side firms as well as banks to share, deploy and use hosted services.
Just as traditional mobile app stores such as Apple App Store and Google Play led to the development of useful, innovative mobile applications, LedgerConnect blockchain app store could also spur the development of ground-breaking FinTech platforms and applications across the finance ecosystem. Marie Wieck, IBM Blockchain Manager, echoed similar thoughts.
According to her:
“LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value-added services for blockchain networks.”
Presently, LedgerConnect is configured to only work for applications that support IBM Hyperledger Fabric environment. However, CLS has indicated that future updates to the program could roll out support for Ethereum or R3 Corda framework. According to IBM, the partnership will also involve liaising with vendors to optimize their apps for Hyperledger Fabric and supervising security and performance tests before applications are made available on the platform. On the other hand, CTL will contribute to the expansion of the LedgerConnect platform by offering its network of bank clients.
Some of the vendors slated to offer services on LedgerConnect include Copp Clark, Baton Systems, OpenRisk, IBM, Calypso, MPhasis, SynSwap and Persistent Systems. Although LedgerConnect is still in its infancy, a few apps are already available on the platform and are currently being used by banks. LedgerConnect is a core component of CLS strategy to explore innovative ways for curbing risks and providing secure and efficient solutions for a wide range of businesses operating in the financial markets. CLS is hoping that the LedgerConnect platform will help it expand its business beyond the foreign exchange space.
Despite its growing popularity in the finance industry, there are still mixed feelings associated with embracing blockchain technology. This inertia in the adoption process is partly due to insufficient knowledge about the technology; a blockchain based app store could help shorten the learning curve for skeptical banks by making a wide range of fintech solutions accessible.
Speaking on the merits of the blockchain app store, the CEO of BlockStar, Christian Ferri had this to say:
“Most of these banks operate in silos,” he told the E-Commerce Times. “Having an apps store, regardless of whether they use it or not, gives them an opportunity to see the breadth of what’s available to them.”