Finance Archives – Hyperledger Foundation

May 23

Fintech Open Source Foundation (FINOS), Hyperledger Foundation, and The Digital Dollar Project Team Up to Drive Open Development and Collaboration for CBDCs

By Gabriele Columbro, FINOS; Karen Ottoni, Hyperledger Foundation; and Jennifer Lassiter, The Digital Dollar Project Blog, Finance

Central Bank Digital Currency (CBDC) has the power to transform economies — connecting people, governments, businesses, and organizations locally and globally through technology that could not have been imagined even 20 years ago, and with more advances on the way.

Experimentation is central to answering any question, especially one with as many stakeholders, variables, and “unknowns” as CBDCs. Without open source development and collaboration between stakeholders, each will have to invest significant resources to build code independently and will have no way to avoid duplicating efforts or mistakes.

To achieve success, we must experiment, question, interrogate, and evaluate without fear of failure. We must share information openly and freely across borders, industries, and institutions to create a rich dataset that drives innovation and decision-making.

That’s why we are thrilled to announce that Fintech Open Source Foundation (FINOS), Hyperledger Foundation and The Digital Dollar Project (DDP) are joining forces to create an open community dedicated to experimentation, information sharing, and discussion around CBDCs, ensuring that central banks that decide to embark upon researching or deploying CBDCs are doing so with the best available secure technology.

Each organization’s unique community will contribute to building a neutral place to collaborate, use, share, and build technologies that advance the exploration of CBDCs. Our aim is to bring together a global forum of practitioners and stakeholders to engage in open collaboration and development and to forge private-public partnerships for experimenting, sharing knowledge, and working together on open standards and research.

We are just getting started and are excited to share more in the weeks ahead. To learn more and to get involved, visit https://project.linuxfoundation.org/open-digital-currency.

Jan 11

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Public Mint Lowers Barrier to Entry for Blockchain-Based Investing and DeFi with Hyperledger Besu

By Hyperledger Blog, Finance, Hyperledger Besu, Member Case Study

Read the full case study here.

The cryptocurrency market will reach nearly five billion USD by 2030, according to recent market research. With impressive returns and projected growth, it’s no wonder people want to get involved in decentralized finance (DeFi).

But for those who don’t already understand crypto assets, there are significant barriers to entry. What’s a wallet? Do I need one, and how do I get one? What are keys? How do I protect them? What platform do I use?

And there’s also the problem of risk. Crypto users have grown comfortable taking chances in the space. But the average person is used to more trust, assurances, and transparency when it comes to their money.

Public Mint, a Fintech firm with offices in the US, UK and Europe, decided to create a graduated introduction into blockchain-based investing. To do so, Public Mint began with what users already know: traditional banking and fiat currencies like the US dollar.

Public Mint wanted a platform with a one-to-one equivalency between US dollars and a synthetic version of the dollar on their blockchain. This means every synthetic “on-chain” dollar maps to a corresponding US dollar held at one of Public Mint’s regulated custodian partners.

Users would not move dollars from one account to another, the same way traditional banks do. Rather, the physical dollars stay in a custodian bank. Users transfer ownership of these physical dollars using an instant-settlement, low-cost blockchain.

To develop its system, Public Mint experimented with the blockchain technologies available in 2018. Eventually, it decided on an Ethereum-based technology stack called Pantheon developed by the Pegasys team at ConsenSys. For Public Mint, tapping into the large community of Ethereum developers was an important part of the decision.

About a year afterward, Pantheon became Hyperledger Besu, an open source project under the umbrella of the Hyperledger Foundation, which pleased Public Mint as that brought them closer to the Hyperledger and corporate communities.

Public Mint’s network launched in July 2020 with its web wallet payment system. To date, more than 3,800 wallet addresses have been created since Public Mint’s launch. It has more than USD$2.9 million in on-chain value, and the platform has validated more than 28,000 transactions.

Building on the initial wallet capabilities, Public Mint now also has introduced the EARN Program. EARN is for users who want to take the next step into DeFi investing but don’t want to manage multiple wallets or private keys.

Hyperledger worked with Public Mint on a case study that details the launch of this network and the pathway it creates for bringing DeFi to a broader audience. It covers the core architecture of the Public Mint system, its blockchain-based banking and DeFi business models and the roadmap for future applications.

Read the full case study here.

Nov 11

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Splunk Adds Hyperledger Fabric Data Visibility into Mix, Powers New Blockchain-Based Content Management Solution for S&P Global

By Hyperledger Blog, Finance, Hyperledger Fabric, Member Case Study

Read the full case study here.

Large organizations have always struggled to get visibility into their data. Frequently, data comes in many sources and formats while also being siloed across the organization. DLTs add ledger data and metadata to the mix.

Similarly, consortiums need to interoperate with each other. Yet organizations often use disparate tools for logs, metrics and tracing. All these are deployed on different clouds or on-prem. Then they build their own tools to take data from the ledgers and put it into a SQL database. Consortiums may include competitors who don’t trust one another, so they don’t want to share data. But, if no one shares data, it can be challenging to determine if an organization has a problem or if it lies in the network.

Splunk, a company focused on removing barriers between data and action, took on this challenge by creating open source solutions that allow the ingestion of ledger data and corresponding metadata while correlating with other data sources.

Splunk’s customers include 92 Fortune 100 companies. Meeting their needs was critical so Splunk asked a lot of questions. They learned that many customers used Hyperledger Fabric, and it was fairly straightforward to ingest that DLT data. Splunk pulls in data without caring about structure, schema, or form so there was no need to format Hyperledger Fabric data before ingestion.

The next questions were about what they could do with the Hyperledger Fabric data. Users could analyze and correlate blocks and transaction data with other data they had in Splunk. But conversations with customers revealed they wanted more, including chaincode events, metrics, and, most recently, private data collections.

Initially, Splunk focused on uses from an IT perspective. Then the focus shifted to security. Customers wanted to know what else they could do to secure their infrastructure. Keeping it up and running was important, but so was making sure nothing would compromise their Hyperledger Fabric environment

One of those interested customers was S&P Global, which delivers data, research, and credit ratings, among other things, to governments, companies, and individuals. In 2019, it was entering a new region. S&P took this opportunity to explore modern technologies and new ways of doing business. It decided to build a content management solution from scratch with innovative technology and security.

Splunk’s Hyperledger Fabric-based applications caught S&P’s attention. Leveraging the Fabric data in Splunk meant S&P could now get user interactions and metadata—like who uploaded documents or modified documents and when. S&P developed applications to retrieve that metadata and present it to the user for document searches. This opened up possibilities for providing an audit trail.

The resulting solution, S&P Global Secure Vault, is multi-cloud, multi-tenant, and secure, and it is ready to scale to multiple regions and multiple participants. In the solution, S&P uses Splunk for three primary areas. The first is infrastructure monitoring on the operations of different components. The company wants to make sure the system stays healthy and the right teams are alerted if there’s an issue. The second is visibility into the events happening within the blockchain network. And third is business activity monitoring, which includes searching for document metadata.

Hyperledger worked with Splunk and S&P Global on a case study that details this blockchain-based secure content management system and how the companies partnered to add visibility into business transactions, making them indexable and searchable. It also delves into Splunk’s commitment to open source software and plans for helping customers that use Hyperledger Fabric get even more from their data.

Read the full case study here. For more details on security monitoring of Hyperledger Fabric data, tune into the Wednesday, December 1, webinar with Christoper Cord of Splunk.

Oct 28

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A Look at Hyperledger-Powered Financial Services Solutions in Action

By Hyperledger Blog, Finance, Hyperledger Besu, Hyperledger Fabric, Hyperledger Firefly

It is #HyperledgerFinTech month, so we are spotlighting solutions where Hyperledger is at work across the finance service market. Read on for details on applications and solutions leveraging a mix of Hyperledger technologies to invent and reinvent a range of services, including eKYC, insurance claims processing, accounts reconciliation, specialty trades and more:

AnaMeen

AnaMeen is a multi-organizational eKYC solution from Ahli Fintech involving Jordan Ahli Bank and Zain Jordan, a mobile telecom provider. This eKYC-as-a-Service, built on the Oracle Blockchain Platform (OBP), aims to remove the friction in the current KYC and onboarding process challenges faced by all banks and financial institutions and to provide greater financial inclusion for all Jordanians. It delivers an enhanced and secure customer experience, with a 10-day account opening process now made instantaneous. Ahli Fintech leverages augmented intelligence and deep learning technologies to verify the identity of the AnaMeen users’ government-issued identity documents. It collects the four-signature specimens of the users and verifies the client signature on file during a verification video-call with an AnaMeen agent. Customers verify their information and their identity is matched based on their facial biometrics during the video-call. Each customer’s identity is uploaded to a smart contract on OBP to verify and endorse it, storing it in the “Meen World” immutable ledger distributed across the permissioned blockchain network. The solution, which is powered Hyperledger Fabric, enables self-sovereign instant KYC data sharing, with full control in the users’ hands in full compliance with international data protection and data privacy standards. It is accessible via the “Meen World” eKYC-as-a-Service partner portal, where entities can request access and users can grant access in order to use the services provided by these entities, including instant digital onboarding with subscribed banks.

The Institutes RiskStream Collaborative

The Institutes RiskStream Collaborative is the risk management and insurance industry’s first enterprise-level blockchain consortium that brings together experts and developers to advance insurance-specific use cases via Canopy 3.0, a custom blockchain architecture running on Kaleido that leverages Hyperledger FireFly.

A major source of inefficiency in the life & annuity insurance industry is that life insurers lack a single source of truth for processing death benefits and claims. For all participants, the multiple handoffs between systems and people increase time, cost, and risk.

The Mortality Monitor project, a blockchain-based technology solution led by RiskStream Collaborative, offers a single source of digital decedent information required to process a claim. Instant notification helps carriers proactively identify potential deaths more quickly, reducing the burden on the beneficiary, and shortening the cycle time.

NPLUS

Sydema has implemented NPLUS, a digital and independent platform that makes the exchange of non-performing loans (NPLs) simple, reliable and secure. This transaction platform provides an exchange where banks and investors can trade NPLs based on standardized data templates, which helps to increase transparency and liquidity in this process. It also reduces the wide bid-ask spreads on NPLs, thus contributing to a faster clean-up of bank balance sheets. NPLUS uses an independent blockchain solution developed by Mangrovia on the Hyperledger Fabric-based Oracle Blockchain Platform so that the tracking and storage of loan portfolio and collateral data is referenceable on the marketplace and NPL trading operations are transparent and persistent.

Public Mint

Public Mint is the first fiat-native public blockchain that allows people, companies, applications and banks to interact in frictionless new ways around money. Prior to Public Mint, transactions required banking and exchange off-ramps, meaning there was no such solution offered by payment providers that was blockchain compatible or that enabled instant settlement in fiat. Public Mint, which is built on Hyperledger Besu, is an open blockchain blended with an API platform that allows fiat money to get all the benefits of a cryptocurrency, minus the volatility and complexity. People and businesses from all over the world are free to build all kinds of fiat-based applications and services on top of Public Mint, fueled by money as we know it – without the limitations of traditional banking rails.

SECURUS

Supermoney has introduced SECURUS, a specialist insurance product that addresses key issues in insurance accounts reconciliation between the customers, brokers, insurer, and re-insurers. It is an end-to-end finance and accounts reconciliation solution incorporating underwriting and claims functions. Using tokenization to create and manage accounting of real-world payment flows across multiple siloed systems, the Oracle Blockchain Platform-based network covers MGAs, brokers, and underwriters. It enables ingestion of data from multiple systems, provides Bordereau reports on money flows related to premiums paid or claims with real-time updates, and partner contracts, including commission rates. Built with Hyperledger Fabric at its core, SECURUS significantly reduces the effort and cost of manual reconciliation and avoids human errors or fraud impacting regulatory compliance, reinsurance accounting and profitability.

Symbridge

Symbridge is a blockchain-based digital asset exchange for institutional and accredited investors. Built on Hyperledger Fabric’s open-source protocol, Symbridge’s advanced technology leverages the enhanced security, immutability, and externally-verifiable state integrity of blockchain and combines it with a high-performance trading environment. The core advantages are better transparency, tighter security, greater accuracy, reduced cost and more efficient trading. Building on Hyperledger Fabric allows Symbridge to have a decentralized validation network without sacrificing performance. Learn more about our validation network powered by Hyperledger Fabric.

TradeAssets

TradeAssets is a digital platform for banks that automates the process of trade finance risk origination and distribution. It enables institutions to buy and sell bank risk assets while retaining some of the bilateral aspects of their current process. KrypC has helped TradeAssets implement a Hyperledger Fabric-based blockchain in its online portal for securing assets. The portal is now live and provides a single point of access for the sale and purchase of assets. Banks can communicate to a large ecosystem of connected institutions to efficiently match the appetite of sellers with buyers. The entire process is quick and convenient, and all communications are secured through the portal.

TradeAssets provides robust security, complete transparency, and immutable trust and consensus between all parties.

Join the conversation about solutions and applications in the financial service market with #HyperledgerFinTech this month on social channels. Or get involved with the Capital Markets or Trade Finance Special Interest Groups.

Cover image by Bicanski on Pixnio

Oct 19

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we.trade Turns to Hyperledger Fabric for Cross-Industry Digital Trade Finance Platform

By Hyperledger Blog, Finance, Hyperledger Fabric, Member Case Study

Leverages open source blockchain and smart contracts to streamline trade finance process, drive growth for businesses and revenue opportunities for banks

Read the full case study here.

In 2019, the Stockholm-based sustainable shoe company Flattered AB needed to re-examine its trade relationship with its suppliers in Spain. In order for Flattered to secure specialty materials such as chrome-free leather and vegan alternatives that are key to the brand’s eco-friendly mission, the company was required to make upfront payments for all its supplies.

But with long-lead production cycles that stretch over a year, Flattered faced an unsustainable gap between costs and income, which significantly impacted cash flow at the company.

Small and medium-sized enterprises (SMEs) such as Flattered AB represent 90% of the businesses and 50% of the employment worldwide, according to the World Bank. And yet SMEs traditionally do not have access to bank guarantees, invoice financing, or credit insurance to help maintain and scale their businesses. Instead, SME owners are left to navigate a laborious paper-based process to account for their international transactions with no protections against late invoice payments, fraud, or managing pre-payments.

Now with the growing urgency for seamless, transparent, and traceable transactions amid the global pandemic, improving access to trade finance has proven to be more vital for economic recovery and a more effective public health response around the world.

This is where we.trade steps in. As the world’s first enterprise-grade, blockchain-enabled trade finance platform, we.trade offers a safe and more reliable platform for buyers and sellers to trade globally using distributed ledger technology and smart contracts.

Through a joint venture between seven European banks, we.trade was established as an independent company based in Ireland in 2017. Today the company is owned by 12 banks, technology leader IBM, and global commercial credit and business information provider CRIF with shareholders from institutions such as CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Societe Generale, UBS, and UniCredit. In 2019, the company brought we.trade technology to market under a SaaS model and has already onboarded 16 banks across 15 countries onto the platform.

Until the launch of we.trade, the universal solution for open account trading or documentary trading was to use paper. But the slow process led to a lot of replication, with business owners filling out the same documents for different trade partners and leaving themselves more susceptible to forgery and human error.

With we.trade, companies can operate with digitized versions of once manual business processes to ensure signatures, contracts, and trade financing agreements can be virtually linked and effortlessly executed.

The challenge to launching a network like we.trade is convincing competing and disparate stakeholders in the trade finance ecosystem to join the same platform. It is impossible to entrust all transaction data to one party. So we.trade recruited IBM as its engineering partner to build a solution using Hyperledger Fabric, one of the blockchain platforms hosted by the Linux Foundation.

With Hyperledger Fabric’s modular blockchain architecture, we.trade was able to prioritize privacy and customize its platform with selected features such as transaction isolation among selected parties in the blockchain and off-chain data storage.

Now with we.trade, SMEs can secure and finance their trade transactions without having to be an expert in trade finance or blockchain. But the real revolutionary component of we.trade is the ability to issue event-based payments based on conditions agreed upon in smart contracts on the blockchain.

Through we.trade, companies receive access to risk mitigation and financing services that are not readily available to them while banks create new revenue-generating services. The entire ecosystem is available in a real-time, user-friendly digital platform that leads to shorter trade cycles and improved working capital.

Hyperledger worked up with we.trade on a case study that details the business and tech drivers for this digital platform as well as the role of open source software and governance in its launch, growth and plans for scaling from here.

Read the full case study here.

Jul 19

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Hyperledger Global Forum Highlights: CBDCs, programmable money and interoperability – part II

By Hyperledger Blog, Finance, Hyperledger Global Forum

As we covered in Part I of this series, CBDC and other payment projects are moving quickly from prototypes to pilots and beyond with some well known projects already in production. As CBDCs and other cross border payment use cases mature, central banks continue to partner with the private sector from small to big companies to accelerate and innovate, and the Hyperledger open source community is at the forefront of the most public CBDC projects.

At this year’s Hyperledger Global Forum (HGF), those on the front lines of CBDC deployments and the development of critical underlying platforms and technologies presented a mix of talks about requirements for and challenges of implementing current and future payment solutions.

Read on for some of the more technical highlights from HGF on the CBDC, programmable money and currency interoperability:

Build CBDC Platform on Hyperledger Besu – Dive in Retail CBDC’s Architecture – Charles d’Haussy, ConsenSys

In this session, attendees got an overview of the architecture of the CBDC platforms powered by Hyperledger Besu.

(8:16) Charles d’Haussy on selecting a CBDC platform: “We mostly recommend building platforms that have public and private capacities so it’s a perfect fit with Hyperledger Besu…we also like to build on systems which are interoperable and global…”

This engaging discussion was then followed by a deep dive from John Velissarios from Accenture into the current landscape of CBDC research and experimentation across the globe.

(26:20) James Edwards on Bakong’s impact on the Cambodian payments ecosystem: “Bakong allows users of commercial banks to take advantage of the PSP’s huge networks of over the counter agents so it has made life a lot more convenient for Cambodians and for Cambodians small businesses. It has also incentivized PSPs to develop more bank-like services, a wider range of services, and has incentivized banks to develop a wider range of PSP-like services so it is enriching competition within the Cambodian payments ecosystem…”

Other sessions of interest from Hyperledger Global Forum on the subject:

Panel: Hyperledger Contributions from IBM – Kelly Ryan, Rakesh Mohan, Chris Ferris, Arnaud Le Hors & Elli Androulaki, IBM (Sponsored by IBM)

This session explored two new Hyperledger Labs: Fabric Token SDK, which enables the creation of CBDCs, and Smart Fabric Client, which is already in use with a major European Central Bank project.

Digital Currency Interoperability With Messages – Vipin Bharathan, dlt.nyc

This discussion, led by the Hyperledger Capital Markets SIG Chair Vipin Bharathan, focused on challenges facing digital currency interoperability and took a deep look at one of the current trends in implementing interoperability: message-based interoperability.

Smart Contracts with Tokenized Fiat Currency on Sberbank’s Platform – Oleg Abdrashitov, Sberbank

This presentation was an introduction to a platform for the issuance of digital assets and smart contracts developed at Sberbank’s Blockchain Laboratory. Smart contracts settle in Sber’s stablecoin: a tokenized ruble. The platform uses Hyperledger Fabric with improvements: Smart BFT for ordering, and with localized cryptography. Transaction confidentiality is achieved via Confidential Non Fungible Tokens. Sber’s platform is scheduled to go live in 2021 for the bank’s commercial clients and will be open for developers to deploy their smart contracts and applications.

Beyond Hyperledger Global Forum

In addition to being a key topic at HGF, CBDCs and other payment innovations are regular topics for discussions and activity across the Hyperledger community. Here are some talks and events, including resources for anyone looking to take part in the CBDC Global Challenge, to check out:

An on-demand replay of the July 13 Singapore Fintech Festival Green Shoots Series | Global CBDC Challenge session: “An impact making opportunity not to be missed” moderated by Sopnendu Mohanty, Chief Fintech Officer, MAS, with speakers for the IMF and World Bank as well as Hyperledger’s Brian Behlendorf
Hyperledger Capital Markets SIG talk by Saket Sinha, Global VP FSS, IBM on “CBDCs Promise and Risk : Operationalizing CBDCs”CBDCs, Promise & Risk”
A panel discussion from the May 26 virtual Synchronize series on CDBCs moderated by Hyperledger’s Karen Ottoni with speakers from ConsenSys, Digital Asset, SilverBank and more

How else can you get involved in this work happening at Hyperledger?

Join as a Hyperledger member. Our member companies are leaders in financial services and technology working on these exciting projects. Learn more about membership.
Participate in our open communities, like our Capital Markets SIG.
Deep dive into Hyperledger projects with training and certifications.
Attend other Hyperledger events and webinars.

Jul 14

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Hyperledger Global Forum Highlights: CBDCs, programmable money and interoperability – Part I

By Hyperledger Blog, Finance, Hyperledger Global Forum

Central Bank Digital Currency projects, known as CBDCs, are moving quickly from prototypes to pilots and beyond with some well known projects already in production. As CBDCs and other cross border payment use cases mature, central banks continue to partner with the private sector from small to big companies to accelerate and innovate, and the Hyperledger open source community is at the forefront of the most public CBDC projects.

As seen at this year’s 2021 Hyperledger Global Forum (HGF), the annual global event where the Hyperledger community gathers to showcase their work with Hyperledger technologies, there is a wide range of activities underway tied to CBDCs and cross border payment. Talks covered key technologies, lessons learned and industry trends as well as production implementations like the work Hyperledger member Soramitsu has done with National Bank of Cambodia (NBC) to the leading work Accenture has been doing for years in the digital currency space.

In addition to developing products and services to deliver to their central bank customers, the Hyperledger community is also working to build the future of digital money with open source principles and goals. Efforts range from market leading discussions in our Capital Markets and Trade Finance Special Interest Groups to IBM’s recent contribution of code bases already in use in conjunction with a major European Central Bank Project. These are now Smart Fabric Client and Fabric Token SDK, two new Hyperledger Labs

Technology innovation happens when companies, academics and regulators come together to meet common goals, and Hyperledger is proud to host the development of code that will enable payment innovations around the world. Read on for highlights from HGF and to learn more about how you can get involved.

On Stage at Hyperledger Global Forum

Keynote Panel: Asia Pacific CBDC Innovation, Collaboration and the Drive to Interoperability – HE Serey Chea, National Bank of Cambodia (NBC); Sopnendu Mohanty, Monetary Authority of Singapore; Brian Behlendorf, Hyperledger

During this session, National Bank of Cambodia’s Assistant Governor HE Serey Chea shared with the audience the work NBC has already put into production with a retail CBDC, working with Hyperledger member Soramitsu using Hyperledger Iroha. A deep dive into this project is also available as a full Hyperledger case study.

Sopnendu Mohanty, Chief Fintech Officer, Monetary Authority of Singapore (MAS), shared some of the outcomes of their leading Project Ubin work and announced a new Global CBDC challenge that the Hyperledger community is supporting as a technical partner. Read more about the CBDC Challenge here.

While the National Bank Cambodia selected Hyperledger Iroha for its retail CBDC implementation, multiple implementations are using other Hyperledger projects, primarily Hyperledger Besu and Hyperledger Fabric. As highlighted below, choice in DLT protocols is important to support and nurture and with that the need for interoperability becomes more important, and during HGF many sessions addressed the needs of our community to come together and resolve.

Fireside Chat on Central Bank Digital Currencies – Dave Treat & John Velissarios, Accenture; Jennifer Peve, DTCC

In this session, both Accenture and DTCC highlighted how CBDC is fast approaching and here to stay. Dave Treat, Senior Managing Director, Global Blockchain Lead, Accenture, and Jennifer Peve, Managing Director, Business Innovation, DTCC, covered the benefits and different approaches to developing a third form of central bank money for our digital world. They offered some practical examples of using Hyperledger Cactus and the Blockchain Automation Framework and a call for our community not to lose faith.

(23:30) DTTC’s Jennifer Peve on the positive momentum in the digital currency space: “Things are happening across Accenture, across DTCC, there many other financial institutions in this space progressing the conversation using distributed ledger and tokenized assets and even looking at the concept of digital currencies, it should be viewed as incredibly positive to see these iterations continue… these are not easy things to solve overnight..don’t lose faith, some of these things are just not easy things to solve.”

This engaging discussion was then followed by a deep dive from John Velissarios from Accenture into the current landscape of CBDC research and experimentation across the globe.

(52:28) John Velissarios’s call to action to get involved: “There’s a strong willingness to share to explore open source ideas, to openly develop new concepts and new ideas…get ready for innovation that will be coming out way imminently.”

(30:30) John Velissarios from Accenture on the innovation behind CBDC: “the ability to bundle both the value and the ownership in a single item that you can transfer from one entity to the next.” Why now: “The technology has become much more mature…there’s a lot more appetite in the marketplace.”

Hyperledger Besu Use Cases – Grace Hartley, ConsenSys; Adam Clarke, Fnality International

For those interested in Hyperledger Besu, this session provided an overview of how the platform is used by Fnality. Fnality International is a financial technology firm founded in 2019 by a consortium of international banks and an exchange to create a network of distributed financial market infrastructures using blockchain to deliver the means of payment-on-chain for wholesale banking markets.

(7:33) Adam Clarke, CTO, Fnality International, on working with the Bank of England: “We’ve put in our application for our first central bank account…When participants of our network fund the Fnality bank account, we will effectively tokenize that money and give full ownership of that money back to them immediately and that effectively removes the counterparty risk. They don’t have to move money through a counterparty, but also they they can also use the DLT to move money between participants instantly with legal settlement finality without having to worry about two or three day settlement period.”

(10:22) Adam Clarke on finding the right DLT platform: “It has to be closed. It has to be permissioned. We are never going to run this on mainnet for obvious reasons, we’re backing central bank money…and actually the consensus algorithm within Besu being IBFT2 or IBFT kind of algorithm allows us to actually get to the point we can show that we have legal settlement finality at a given point within the consensus algorithm so really important for central banks and for meeting regulation.”

Look for part II of this series, which will include highlights from technical talks centered around CBDC and digital currencies.

How else can you get involved in this work happening at Hyperledger?

Join as a Hyperledger member. Our member companies are leaders in financial services and technology working on these exciting projects. Learn more about membership.
Participate in our open communities, like our Capital Markets SIG.
Deep dive into Hyperledger projects with training and certifications.
Attend other Hyperledger events and webinars.

Apr 29

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MemberPass® is Gaining Adoption in Credit Unions

By Julie Esser, Bonifii Blog, Finance, Hyperledger Indy, Identity

Financial fraud isn’t anything new, and the extent of the crime can vary significantly. Forty-seven percent (47%) of US consumers experienced financial identity theft fraud in the past two years—in fact, every 15 seconds a financial fraud incident occurs. COVID-19 has only accelerated the growth of financial fraud. Losses due to identity theft increased by 42% from 2019 to 2020 primarily due to the COVID-19 pandemic, according to a recent study published by the Aite Group.

Today, there are multiple authentication steps in place in financial institutions thanks to the steady increase in cybercrimes. These high-tech frauds take assets from financial institutions and deliver a bit of reputation risk to their public image. Research demonstrates that consumers expect their financial institution to take active steps to mitigate financial risks. Consumers want protection, but they also want a fast and efficient user experience. Too often, each delivery channel is a silo with its own authentication method:

For example,

The call center uses knowledge-based questions
The lobby and drive-up require a driver’s license or other physical forms of identification
Online banking access calls for a username and password plus, often a two-factor authentication.

And consumers want more control over their personal data. In late September 2020, we commissioned a nationally representative survey to over 1,000 adults about their perceptions of MemberPass, Bonifii’s digital credential solution that enables financial institutions to instantly verify financial credentials seamlessly across all consumer contact points in a highly secure and privacy-preserving manner.

There were lots of noteworthy findings:

62% of credit union members said they would sign up for MemberPass if it were available.
56% of respondents who are satisfied with their financial institution would use MemberPass.
67% of consumers would feel more positive toward their financial institution if MemberPass was offered.
50% of consumers would sign up for MemberPass today if a security breach had impacted their account or if they had been identity theft victims.

There is a better way for financial institutions and consumers!

Since its launch in early 2020, MemberPass has been gaining momentum among credit unions and with the members they serve. MemberPass is the financial industry’s first digital credential solution that enables credit unions to instantly verify financial credentials seamlessly across all consumer member contact points. Because MemberPass is built on Hyperledger Indy, credit union members can retain full control of their private personal information. The credential is secure and flexible. It allows the member to reveal only the data necessary for a given transaction. Best of all, it’s impossible to hack or steal.

So far this year, we have seven active MemberPass implementations with another ten more credit unions planning their deployments in the next six months. Our active programs have gotten MemberPass credentials into the hands of about 20,000 members to date.

After we make a program sale, we continue to work closely with our credit union clients. We present each of them with a personalized copy of the MemberPass “Jump Start” playbook. This is a comprehensive toolkit to help the credit union increase the level of member adoption of MemberPass.

The playbook contains product benefits, consumer need identification tools, call center and drive-through workflow models, marketing strategies, incentive programs, and more. Our adoption goal is to get between 5-10% member adoption within six months of the “go live” date.

The demand for decentralized identity among financial institutions is only getting stronger—and, best of all, no one but the consumer owns his or her personal data!

Cover image: Hloom via Flickr / CC BY-SA, 401(K) 2013

Apr 28

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BondEvalue Upends the Global Bond Market Using Hyperledger Sawtooth

By Hyperledger Blog, Finance, Hyperledger Sawtooth, Member Case Study

As many industries struggled to find their footing amid the aggressive headwinds caused by the COVID-19 pandemic, the global bond market has managed to thrive. With near zero interest rates implemented worldwide to ease the financial burdens caused by the coronavirus, the demand for bonds soared.

But for those interested in investing in international bonds, the bond markets in Asia and Europe are particularly hard to break into for two reasons: high investment thresholds and lack of electronic infrastructure.

In the international bond markets, the minimum investment is $200,000. Typically, only those who have $5 million or above can afford to diversify their portfolio, and they pour about one-third of their wealth into bonds.

But there are roughly 500 million people who have assets that range from $100,000 to $1 million and are eager to expand their portfolio. However, they find the bond market impenetrable because of the investment barrier.

For those who have the means to break into the international bond market, it can still be a challenge as trading in the bond markets still happens over the phone and involves a number of intermediaries, with everyone taking a cut.

To make managing bonds faster, more accessible, and more technologically advanced, the team at BondEvalue recognized the need to upend the global bond market and create a modern infrastructure. In November 2019, BondEvalue launched the BondbloX Bond Exchange, replacing the traditional over-the-counter trading experience with the world’s first fully regulated blockchain-based bond exchange that allows consumers to instantaneously and transparently trade bonds in smaller denominations of $1,000 each.

Fully licensed and regulated by the Monetary Authority of Singapore as a Recognized Market Operator, the BondbloX Bond Exchange operates under a strategic partnership with Northern Trust, which is the exclusive custodian for the exchange. Together they deliver integrated asset servicing and digital ownership of fractionalized fixed income bonds on a blockchain network.

Using depository receipts as a model, traditional bonds are brought into the BondbloX Bond Exchange through designated market makers or a member participant from a secondary market. A designated custodian on the exchange (in this case, Northern Trust) confirms receipt of the bond into the blockchain, which then triggers the bond to be divided into fractionalized BondbloX worth $1,000 each and backed one-to-one on the blockchain.

These BondbloX are then traded on the BondbloX Bond Exchange and, with the blockchain infrastructure, settlement is nearly instantaneous, occurring on a T+0 basis. So instead of waiting for the normal two-day settlement cycle for traditional bond transactions, BondbloX trades are final within seconds, reducing counterparty settlement risks for investors.

The BondEvalue team realized the only way to feed the beast of building an innovative, groundbreaking global bond exchange would be to deploy Hyperledger Sawtooth. As a modular and flexible architecture, Hyperledger Sawtooth allows developers to separate the core system from the application domain so smart contracts can specify the business rules for applications without needing to know the underlying design of the core system.

Hyperledger worked up with BondEvalue on a case study that details how the exchange works, the technology and governance behind it and plans to scale to include more participants in more markets.

Read the full case study here.

Feb 03

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Wecan Comply: How to use the Hyperledger Fabric blockchain for real-time compliance auditing

By Vincent Pignon, Omar El Mansour and Justine Latta Blog, Finance, Hyperledger Fabric

The state of compliance today

Compliance today is hampered by a real lack of coordination between its various players. Indeed, each actor uses its own processes and tools. Some have invested in technological innovation while others continue to use more traditional methods. The situation is such that nothing has yet been really proposed to facilitate compliance exchanges between external asset managers and their custodian banks.

The administrative workload is heavy and is increasing: the list grows daily, with a new regulatory alert in financial services alone issued every seven minutes according to Thomson Reuters Regulatory Intelligence. And it is estimated that 15 to 25% of a company’s revenue is wasted because of poor data quality and management says Experian plc. Indeed, information is, most of the time, structured internally but exchanged externally by mail, email, phone or fax in a very inefficient and unsecured way. For EAMs, onboarding at a custodian bank therefore requires several hours of work: the announcement process carried out at all the custodian banks, which can go up to more than 50 hours, is still very manual today.

In addition, the annual review (partial or complete) of the relationship with the bank is an important process for the bank and requires administrative verification work that can take several months.

Compliance efficiency thanks to blockchain

The administrative burden caused by the duplication of compliance processes will be considerably reduced, thanks to blockchain. It will make it possible to digitize and streamline the management of information, thus avoiding many errors. Bockchain technology will enable independent managers to implement much more reliable, smooth and secure operating procedures.

The Wecan Comply platform makes it possible to digitize and standardise the information exchanged between financial players in order to facilitate and streamline exchanges between banks and independent asset managers in a secure manner. The objective is to enable financial players to pool their resources on non-competitive and non-differentiated subjects in order to improve auditability and, eventually, to automate it. This will not be available immediately, but the Wecan Comply platform will soon be linked to official registers. Managers will thus be able to ensure that their custodian banks have direct access to all kinds of official documents, without having to worry about collecting and processing them. By skipping these verification steps, they will be able to save time while limiting the risk of fraud.

The Blockchain Association for Finance: a unique compliance network

Wecan Comply is an ambitious project aimed at optimizing compliance processes. It is the first blockchain infrastructure addressed to Private Banks, thus significantly opening up the prospects of use cases. Several banks and independent asset managers have already joined this unique network: Pictet Group, Lombard Odier Group, Edmond de Rothschild, REYL Group, Hyposwiss Private Bank Genève SA, Gonet, Banque Cramer, CAPITALIUM Wealth Management, PLEION Gestion de fortune, and Fransad Gestion SA. In order to carry out this project, Wecan Group has created an industry standard that meets the best regulatory requirements set by regulators. With a view to ensuring neutrality and the proper functioning of the platform, the members of the network have created an association: the Blockchain Association for Finance.

Systematic and real-time compliance status

The platform allows EAMs and banks users to track and receive real-time alerts for all changes to ensure the compliance of documents and information shared. It monitors, reports and analyzes events and changes while ensuring the security of the environment thanks to Hyperledger Fabric. This solution enhances the security by allowing the user to instantly know who made a specific change, when, and from which entity. Since the data stored is authenticated by multiple institutions and continually up to date, the compliance offices have a real-time reporting of the compliance status and can share it at any time to the management or the external auditors.

Custodian banks save time by accessing in one place standard and structured information coming from their EAM. And they have a real-time compliance status linked to all data. Wecan Comply solution drives efficiency and cost effectiveness, reducing the painful administrative work. Banks are processing top-notch quality of data since all information is validated by other banks of the network. All exchanges are digital, onboardings are faster and there is a real-time auditability of all modifications.

Why we choose Hyperledger Fabric

Wecan Comply uses Hyperledger Fabric, an open source blockchain platform for enterprises hosted by the Linux Foundation. Hyperledger Fabric enables private actors to exchange information while retaining ownership of their data. Each party is clearly identified, and every transaction is authenticated, authorized, validated and tracked.

Thanks to Hyperledger Fabric there is no central administrator: each bank and EAM controls its own information in a fully encrypted and secured network. As a solution provider, Wecan Comply does not have access to the information exchanged. It is only powering the network. Hyperledger Fabric offers a high level of security by ensuring that data access is only made after the user’s private key has been verified by the system. This eliminates the chance of unauthorized access and gives individuals greater control over their information. In addition, the platform is certified by a zero-knowledge proof technology that allows to protect the privacy of all users and to decentralize data control and sharing.

The world of compliance tomorrow

The union of financial players within a network offers good prospects for development. In particular, data exchange among custodian banks, regulatory bodies and auditors will benefit from significant gains in efficiency.

The next step for Wecan Comply is the connection to the official registers that will create a real ecosystem around compliance and thus release all the value of the platform. Wecan Comply was initiated with and for the actors of the financial industry. Our ambition is then to apply this method to all regulated professions where there are standards in order to guarantee a monitoring and audit of compliance in real time.