Royal Bank of Scotland is going to pilot a service based on blockchain technology in 2016. Experts say that such a move may make this bank one of the first important banks to offer a product based on the technology behind Bitcoin. Moreover, they predict that it may radically change the way the banking sector functions.
However, RBS didn’t provide detailed information about the project, but John Lyons, head of strategy and commercial services for RBS’s payments business, told it is “on the fringes of payments”. He also suggested that the bank would be able to launch the service in early 2016.
“Next year, after Easter, we hope to demo a proof-of-concept proposition based on blockchain technology that could be piloted the same year and taken to market,” Lyons told at the Sibos financial services conference in Singapore.
Mr. Lyons also added that in the future the technology could include payment services, financial settlements and asset registers.
“Like most people, we’re in the ‘learn and explore’ phase with blockchain. We’ve announced our involvement in the R3 syndicate – that’s really important. Distributed ledger and blockchain requires a number of parties to be involved. Being involved in contributing to the development of protocols and standards and learning through that and with others is a priority. Do we see opportunity for blockchain around payments? Yes,” he said.
Various sources say that a 2016 release would put Royal Bank of Scotland ahead of their commercial banking competition in terms of blockchain use. Still, it remains unclear as to the degree of probable customers’ trust which would be placed on the emerging technology.
Damian Richards, head of payments strategy and innovation at RBS, had previously discussed the potential of blockchain use in practice at the EBAday Conference which took place in Amsterdam in May 2015. Mr.Richards spoke anout the potential for emergency overseas transactions to be made to clients, a process which today still depends on inefficient outdated backend systems being synched and reconciled with one another to confirm payment authenticity.
It’s necessary to say that RBS is one of nine founders of the R3 consortium, set up in September 2015 for members to work together on a framework and architecture for using blockchain in financial markets. Other members of the group include Barclays, Goldman Sachs, UBS and JP Morgan.
“This is an exciting partnership, and we’re very pleased to be involved,” commented Niall Cameron, Head of Markets, EMEA at HSBC. “Innovative, open-source developments like distributed ledger technology require expertise to deliver but have huge potential, offering banks and their clients the prospect of enhanced security, lower costs and improved error reduction.”