With the aim of developing a blockchain-based application to improve the regulatory reporting of mortgage transactions, a partnership has been formed between New York-based software company R3 CEV and Britain’s financial watchdog and two large banks.
Together with the Financial Conduct Authority, the Royal Bank of Scotland Group Plc and another global bank which did not wish to be named, R3 said that it had developed a prototype of the system, the company said on Tuesday.
Generation of automated delivery receipts for the regulator each time a mortgage is booked will be allowed for banks by the newly developed system which was built using R3’s blockchain called Corda. The cost of the process and the risk of error would be reduced to a significant degree, hopes the organization.
Aimed at building blockchain based technology for the finance industry, there is a consortium of about 80 financial institutions which is led by R3.
A shared record of data maintained by a network of computers on the internet that can be accessed by all authorized parties is allowed by blockchain, which first came to prominence as the system underpinning crypto currency bitcoin. In the hopes that it can help reduce their back office costs and complexity, financial institutions have been investing in its development.
It is ideally suited for simplifying record-keeping, suggested the proponents of the technology.
The FCA prototype “can give the regulator a new tool capable of overseeing mortgage activity much more quickly and efficiently than before whilst greatly reducing data inconsistencies,” Richard Crook, head of emerging technology at RBS, said in a statement.
Steve Hey man, a project lead at R3, said in an interview that when processing reports that are typically sent in variety of formats, the new technology could also reduce the amount of work required by the regulator.
R3 said that a live testing phase, which is expected to involve other lenders and regulatory bodies, would be the next focus of the work of the group as the participants in the project will continue to work towards it.
In order to become more efficient, the increased use of innovative financial technology are being looked at by regulators across the world. Having launched a dedicated division almost three years ago, the FCA has been leading the way globally on this initiative.
From companies including Bank of America Corp, SBI Holdings Inc, HSBC Holdings Plc, Intel Corp and Temasek Holdings, R3 raised $107 million in May after being launched in 2015.
(Adapted from Reuters)