Fintech Friday – fintech news round-up of the week

Highlights from the industry this week include high profile R3 blockchain consortium securing a whopping $107m via a fund raiser

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Nasdaq and Citi launch “pioneering” blockchained payment solution

Nasdaq and Citi have joined forces to launch a blockchain driven integrated payment and reconciliation solution.

According to Nasdaq, the collaborative effort has led to a “pioneering institutional banking solution” that tightly integrates blockchain technology with Citi’s global financial network leveraging API technology. A number of payment transactions have already been concluded on the platform, including Citi’s automated processing of cross-border payments.

Key benefits promised by the platform include a seamless end-to-end transactional process for private company securities and increased operational efficiency and ease of reconciliation, with real-time visibility of payment activity on the blockchain ledger.

It is also envisaged the project will enable businesses such as Nasdaq Private Market to offer more powerful solutions to address the challenges of liquidity in private securities by streamlining payment transactions between multiple parties.

“This new payment capability marks a milestone in the global financial sector and represents an important moment in the commercial application of blockchain technology," says Adena Friedman, CEO, Nasdaq, adding the effective integration of blockchain and global financial systems could have “profound implications for outdated administrative functions in the capital markets".

 

R3 blockchain consortium raises $107m

The R3 consortium of financials and tech companies developing blockchain applications has raised $107 from members – the largest funding round in the history of distributed ledger technology (DLT).

According to Finextra the 40 participants in the round include the likes of Intel, Barclays, UBS, Bank of America Merrill Lynch and HSBC. R3 says that this is just the first two of three tranches in its Series A round, with the third being opened up to members and non-members later this year. 

The news comes after several months of negotiations, during which time some major backers - including Goldman Sachs, Santander and JPMorgan Chase - have jumped ship. Finextra says the group was initially understood to be seeking to raise $200m before cutting this to $150m.

The funds will be used to "accelerate technology development and expand strategic partnerships for product deployment", with the focus on R3's DLT platform, Corda, and its infrastructure network.

As for Goldman and Santander walking away, Fortune reckons  it might have been because they are both investors in Digital Asset Holdings, a rival blockchain start-up headed by ex-JP Morgan executive Blythe Masters.

Fortune believes the shakeup in the R3 membership indicates the field is maturing rather than waning. Distributed ledger technologies—which underpin cryptocurrencies such as Bitcoin—are gearing up to replace the aging back office software and databases that keep Wall Street humming. As these blockchain solutions come closer to reality, the companies backing their production are beginning to pick sides, it says.

 

UK challenger bank CivilisedBank secures banking licence

Digital only lender CivilisedBank has joined the growing army of UK challenger banks to secure a banking license from the Bank of England.

The Telegraph notes that CivilisedBank wants to return to a more traditional model of locally-focused banking. While it will not have any branches, CivilisedBank wants to have a “local banker” in major cities and town, with its employees visiting the lender’s customers at their premises.

The firm plans to fund itself with retail savings and its community focus is similar to that of Sweden’s Handelsbanken, which has a decentralised model providing local services in the UK, although unlike CivilisedBank it has branches.

CivilisedBank is the latest in a wave of upstart challengers that hope to snatch customers from the big high street lenders, which dominate the industry. The firm, which is backed by investment manager Warwick Capital Partners and will focus on small businesses, aims to start taking on customers at the start of next year.

The challengers range from bigger lenders with branch networks like Virgin Money, TSB and Metro Bank, to mobile app-based Atom and Starling. Some have struggled, however, with Tandem losing its banking licence in March after it failed to raise enough capital – a condition of its approval by the Bank of England.