Managing director at the R3 blockchain consortium Charley Cooper expressed the symbolism of the trade. "This was far more than a proof of concept in a fenced lab," he said. "These are regulated institutions in a real market and it is a unique demonstration that blockchain solutions are being deployed in commercial settings."
The interbank trade was made possible thanks to software developed by liquidity management firm HQLAX and the use of a blockchain platform from R3. According to ING's blockchain initiative lead, Herve Francois, a market-ready version of the application can be expected by the end of 2018.
The banks hope to cut costs and save time related to securities lending with the technology; legacy systems for these types of trades involve intermediary account transfers, which often take days and come with added fees. Emmanuel Aidoo, head of distributed ledger and blockchain strategy at Credit Suisse, said, "The platform gives us an opportunity to make balance sheet and capital usage much more efficient and timely."
The use of the new technology to enable a trade between these prominent banks may be an indicator that other major financial institutions will pivot toward blockchain-based remittance systems in the future.