The finance sector has come around on its opinion of blockchain technology as most of the industry is finally acknowledging the importance and transformative capabilities of the distributed ledger technology, and as big players in the industry have started investing in this disruptive technology. The idea that blockchain technology could create innovative solutions in the financial sector has moved from the realm of speculation to reality. Financial bodies and big banks such as JPMorgan, Santander, and Barclays are pouring in billions of dollars into blockchain technology, and are filing blockchain patents at a growing pace.
In a bid to solidify their position as pioneers in the industry, leading financial institutions continue to experiment and spend money on blockchain innovations while other financial cooperatives such as credit unions appear to be left out of the action.
CULedger, a research-to-action initiative launched by a group of credit unions and other smaller financial service providers is working towards reversing this trend. They believe that big banks shouldn’t be the sole beneficiaries of blockchain innovations, and are advocating for credit unions to also get into the game and leverage blockchain solutions to provide ground-breaking and cutting-edge products and services to their members. To this end, the CULedger initiative was launched to study the potential of using a private permissioned distributed ledger for credit unions.
CULedger initially launched a technical pilot aiming to build a blockchain network consisting of series of nodes. The pilot program focuses on preparing the platform for initiatives promoted by CULedger participants; this will be achieved by setting benchmarks for uptime, speed, and consistency. Running on the CULedger’s open-source protocol, credit unions participating in the pilot will be able to confirm the viability of the network by creating independent, stand-alone nodes which require no other additional resources.
Despite being in the pilot phase, dozens of credit unions have already joined the CUledger initiative. This demand shows that credit unions have recognized the innovative potential of the blockchain and are willing to embrace this new technology. For CULedger, the end goal is to be able to utilize distributed ledger technologies to build a blockchain network that can be used by credit unions for a range of functions including smart contracts, identity management, and money transfers.
CULeger is also investing in other financial solutions. The company recently announced a partnership with Hedera Hashgraph to work on a cross-border payment platform for millions of credit union members. This cross-border platform will help lower transaction costs, improve transparency, and increase transaction speed. It will be launched sometime in 2019 as CULedger is hoping to have as many participating members as possible before the launch.
Going into more details on the problems associated with cross-border payment, Rick Cranston, COO of CULedger had this to say:
“Currently, cross-border payments are painful for all parties involved […] they take time, they’re expensive, and there is limited visibility into the transaction. Hashgraph is fast, and it provides visibility between the two parties at a significantly lower cost.”
When it comes to blockchain consortia networks, banks rely on the R3 and Hyperledger platforms. CULedger hopes to fulfill the same role for credit unions. The program looks very promising and has already gained the attention and support of leading names in the credit union sector including the Credit Union National Association (CUNA), Best Innovation Group (BIG), and the Mountain West Credit Union Association (MWCUA). If proven successful, CULedger will be able to bring together a consortium of credit unions and credit union service organizations (CUSOs) to create a blockchain network specifically tailored to the requirements of credit unions.