Published: Tue, October 17, 2017
Money | By Armando Alvarado

IBM develops blockchain system for banks

IBM develops blockchain system for banks

IBM today announced it is teaming up with Toronto-based FinTech company Dream Payments to bring new revenue generating mobile payment offerings to financial institutions and merchants in the United States via the IBM Cloud.

The economic impact of improving the flow of both money and commerce could be profound, IBM said.

The banking network includes "12 currency corridors" that encompass Australia and New Zealand, as well as smaller countries like Fiji and Tonga.

Rolled out in collaboration with open-source blockchain network Stellar.org and cross-border payments system firm KlickEx Group, the solution is meant to improve the speed in which banks both clear and settle payment transactions on a single network to near real time.

The Dream Payments Cloud is rolling out to US financial institutions to make mobile payment acceptance possible without an expensive and lengthy IT process.

This means that a universal blockchain payments solution could make it possible for a farmer in Samoa to enter into a trade contract with a buyer in Indonesia. "The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalize transaction terms with immediate payment, conducting global trade with transparency and relative ease", the company said in a statement.

National Australia Bank, TD Bank, and other financial institutions are lending their support, by collaborating and advising in the system's development with the intent to help expand its use in other regions around the world, says IBM.

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IBM is leading a project that uses public blockchain technology to make global payments in developing countries more efficient and less expensive. "Making distributed ledger technologies more interoperable is the latest example of IBM's leadership driving the rapid advancement of blockchain".

IBM Blockchain provides high performance orchestration to move payments among parties.

Blockchain, which relies on a disparate network of computers to create an indelible, tamper-proof record of transactions, is most famously associated with the digital currency bitcoin.

IBM and Stellar both are working together on a project named Hyperledger Fabric under which they are developing open source blockchain tools to assist payment infrastructures.

"This new innovation and collaboration represents a significant milestone for Stellar as well as the financial technology industry as a whole", said Jed McCaleb, co-founder of Stellar.

According to IBM's VP of Blockchain, the banks will use stellar's digital currency for a temporary period as it is quite predictable that in the upcoming year, central banks will also start issuing their own digital currencies and that these will become a vital part of blockchain-based money transfers.

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