IBM and the market infrastructure provider CLS on Monday are launching an app store of sorts for financial applications that can run on a blockchain.
It is called LedgerConnect, and it is already being used by Citigroup, Barclays and seven other banks that are not yet ready to go public. The banks helped design LedgerConnect, and they choose and help validate the applications that run on it.
This is not for any type of blockchain apps. It is only for applications that can run on the Hyperledger Fabric distributed ledger.
In the future, LedgerConnect might support other distributed ledgers such as Ethereum or R3’s Corda, the two companies said.
“Corda and the Hyperledger Fabric are where we’re seeing the most activity, at least in the banking and financial markets world,” said Keith Bear, vice president of global financial markets at IBM. Northern Trust, for instance, built its
IBM says it works with vendors to make sure their apps can run on Hyperledger Fabric, and it conducts security and performance tests on the apps before certifying them. CLS is contributing its network of bank clients to the effort.
The idea is that banks that have decided to use Hyperledger Fabric now have a place to go to find apps that run on it—apps that someone else has already tested. LedgerConnect is also meant to give vendors of such apps a way to distribute their wares to banks.
“We’re trying to make sure there is one secure, robust and scalable network on which you already have a number of users and then, through the concept of an app store, app developers and service providers can deploy their services on top of this, so that banks get a regulated, trusted, secure market infrastructure and they don’t have to worry about vetting each individual vendor separately,” said Ram Komarraju, head of innovation and solution delivery at CLS.
CLS is hoping LedgerConnect will help it expand beyond the foreign exchange space that has been its main focus.
A few apps are available now on LedgerConnect, and banks have begun using them. They include Synswap, a portfolio reconciliation tool for over-the-counter derivatives, and Openrisk’s margin management and collateral apps.
Several applications are being piloted on LedgerConnect, including a know-your-customer application IBM developed that is being tested in Singapore and sanctions-screening software from mPhasis. Baton Systems, Calypso, Copp Clark and Persistent Systems are also participating in the proof of concept.
LedgerConnect should be especially helpful for small fintech startups like Synswap, which recently graduated from Barclays’ Rise accelerator in New York, Bear said.
“They’re still early-stage, and they don’t have the resources to build a network of banks to deploy their application across,” Bear said. “It’s a herculean task to start conversations with several banks at once and hammer out all the details of how they will collaborate and cooperate on building a network that will use the Synswap application.”
