Having as purpose the validation of the security, processes, procedures, and protocols of the bank’s new DDR model, the pilot programme will limit deposits and transfers to senior VersaBank executives and members of the board of directors residing in Canada. VersaBank's DDRs are highly encrypted one-for-one digital representations of actual cash on deposit with the bank and are placed on selected blockchains of the likes of Algorand and Stellar, which enables for them to be transferred as a claim on the cash deposit.
Under the new model, DDR accounts (or so called ‘e-wallets’), are set to be hosted by VersaBank, as opposed to having them hosted by an external third party, with enablement and security to be provided by VersaBank's VersaVault technology. VersaBank DDR accounts’ access is provided through the company’s ‘Viewer’, a software tool that has been developed exclusively for the bank.
When talking on the announcement, company officials have stated in their press release that the piloting of the internal new DDR model is being done amidst rapidly evolving macro and regulatory environments. By having developed an e-wallet solution, the company is looking to ensure the security of DDR deposits, while simultaneously aligning their model with what is believed to be the future direction of both customer demand and industry regulation.
The implementation of the pilot programme has been approved by VersaBank's board of directors; however, it is not material to VersaBank's banking operations.
VersaBank is a Canada based Schedule I chartered (federally-licensed) bank. It became the first fully digital financial institution following the adoption of a business-to-business model using its proprietary financial technology to address underserved segments of the Canadian banking market in the pursuit of superior net interest margins, while simultaneously mitigating risk.
The company obtains all its deposits and provides most of its loans and leases in an electronic manner, having deposit and lending solutions for financial intermediaries that enable them to grow within their core businesses.
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