Interview with Charley Cooper, R3 on how blockchain technology is changing the financial industry

Could you describe how R3 came into existence, the philosophy behind it and the use cases that your company supports?

R3 was born out of a common frustration with multiple generations of disparate legacy financial technology platforms that struggle to interoperate, causing inefficiencies, risk and spiralling costs. We rethought the blockchain concept from top to bottom and uncovered a new approach to connecting businesses that reduces costs, risks and duplication.

Our enterprise-grade blockchain platform Corda was built by the financial industry for the financial industry. It was developed in collaboration with over 100 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to leverage the power of blockchain to address their specific business challenges. However, as Corda was designed to meet the highest standards of the financial services industry, it can also be applied seamlessly to all other areas of commerce.

What are the challenges for distributed ledger technologies companies and the businesses working with them?

The main challenges are being encountered by companies that don’t understand that public blockchain tech is different to enterprise blockchain tech and vice versa. Most concerning are platforms being developed for business usage that simply modify the public Ethereum platform or use it as a template. While perhaps superficially appealing, the design of these platforms appears to be fundamentally at odds with the needs of the companies whose demands they claim to solve.

What are the benefits of using a distributed ledger in cross-border payments and SCF? What other use cases is R3 looking into for blockchain?

Looking at cross-border payments, domestic payment systems have advanced in many countries to the point of providing real-time funds transfer for customers, highlighting the extremely inefficient experience businesses encounter with international payments. Blockchain can improve world trade efficiencies by facilitating instant international payments. It offers a direct alternative to current systems that can take days to complete an international payment, costing businesses millions, slowing down trade, increasing settlement and fraud risks and causing a liquidity drain for banks.

In 2017 we built a pilot app on Corda with 22 of our member banks, an app that leverages blockchain technology to enable fast, efficient and cost-effective cross-border payments. In supply chain finance, our partner TradeIX has built a blockchain app on Corda for post-shipment trade financing. It enables end-to-end, real-time, seamless connectivity between trade participants, eliminating the data silos which prevent free flow of information causing inefficiencies and discrepancies. We are currently piloting this following a successful proof of concept and are aiming for initial commercial deployments later in 2018.

What are your main partnerships focused on and what are the success stories resulting of these collaborations?

Our network comprises of over 100 partners across industries and regions. These partners are working with us to deploy the first commercial applications based on Corda – known as CorDapps – in the coming months. Over the last two years, we have worked relentlessly to build a vibrant community of partners and provide them with the support and freedom needed to develop innovative solutions that solve their (and our) customers’ specific challenges.

Our partners are working with us in a number of ways: with some – such as Microsoft, Amazon Web Services, Intel and Hewlett Packard Enterprise – Corda is being integrated within their technology. Some are building end-user apps on Corda, such as Calypso’s FX matching app, Finastra’ s syndicated lending app, HQLAx’s collateral app and TradeIX’s trade finance app, in partnership with Accenture. Others are delivering custom-built solutions for clients on Corda and some are advising their clients on the business potential of the platform. As an open and inclusive platform, Corda’s common protocol ensures seamless interoperability between all these applications and services.

How’s the competition in this market?

While there are other players in this space, R3 is the only blockchain software company that combines the critical components for success: innovative technology, experience, industry-wide collaboration and regulatory engagement. We realised over two years ago that blockchain technologies such as Fabric and Ethereum were not the right starting point for the problems we aspired to solve in enterprise, so we built a new platform from scratch.

The result of this process is Corda, which captures the benefits of public blockchain systems, yet with design choices that make it able to meet the needs of regulated financial institutions. Corda’s approach to data privacy and security is ground-breaking in the blockchain space, as Corda only sends data to those who have a “need to know.” This unique feature of Corda emerged from the requirements of financial institutions which need to ensure the confidentiality of trades and agreements while also capturing the benefits of a shared distributed ledger infrastructure.

What are R3’s main development plans for 2018?

We’re currently focused on working with our partners to use Corda to address specific challenges faced by businesses. The solutions to these challenges are the CorDapps our partners are building, and a number of these will be ready for commercial deployment later in 2018. Once a company has deployed a CorDapp, they instantly gain access to Corda’s entire ecosystem, and so the platform can be applied throughout the organisation, fueling adoption of Corda far and wide across multiple sectors and industries.

This interview was first published in our B2B Fintech: Payments, Supply Chain Finance & E-invoicing Guide 2018. The Guide gathers leading solution providers, consultants, associations, banks and corporates that share their latest insights, technologies and best practices in B2B payments, real-time fraud prevention, instant payments business opportunities, and supply chain sustainability.

About Charley Cooper

Charley leads external affairs globally for R3. Formerly, Charley worked as the Chief Operating Officer of State Street Global Market’s division of Trading and Clearing, before which he served as the Global Head of Legal Operations in the risk management division of Deutsche Bank AG.

About R3

R3 is an enterprise software firm working with a network of over 200 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop on Corda, its blockchain platform designed specifically for businesses.