Wells Fargo , the banking giant claims it can perform effectively in money transfers than SWIFT, thus its blockchain for internal cross-border money transfers is faster and really more efficient than the popular global messaging system used by over 11,000 financial institutions known as SWIFT.
It came alive this week, the Wells Fargo Digital Cash. It works by using R3’s Corda Enterprise software to administer internal book transfers, when funds move from a payer’s account to a payee’s account at the same bank.
“Definitely, the need to transfer money and run exchanges from one country to the other is inevitable and as such the need to pass through third parties such as banks and SWIFT, according to Lisa Frazier, the head of innovation group at Wells Fargo, emphasized on the long process, time and cost of using these third parties.
Funds are usually being moved by banks within 20 hours a day, from only six to nine hours, and five days a week using the digital cash when it relies on wire transfers and systems like SWIFT, Frazier stated.
“It’s really more efficient, faster than SWIFT, and cheaper too.
Though right from time, for internal book transfers between branches in different countries, the bank needs to use SWIFT as this different for domestic internal book transfers.
After a successful proof-of-concept, “the blockchain project hopefully will go into a pilot phase next year which will allow those locations to exchange digital cash among themselves,” Frazier said.
Wells Fargo’s digital cash is going to be backed 1-for-1 with the analog kind , though same as rival Megabank – JPMorgan’s JPM Coin-.
According to Frazier, “the fiat currency will be held, so it’s a stablecoin, and the digital cash tokens will be issued. Those tokens are able to be exchanged as they are placed into digital wallets.”
Since 2016 Wells Fargo has been participating in blockchain tests that according to Frazier, she described as “external,” meaning the involvement of other banks and financial institutions. However, the bank has busy schedules pursuing internal use cases for distributed ledger technology (DLT), she stated.
“As a matter of fact, we have found a solid internal application for DLT on our book transfers. By so doing this we are streamlining the book transfer process and at same time reduce anything that will bring reduction especially the use of intermediaries which causes delays in the over all transactions. Therefore we are widening the operating window for clearing of FX wires cross-border,” she said.
The stablecoin project also happens to be the first project the bank has built using the paid-for version of R3’s DLT, which Wells Fargo has now licensed R3’s DLT— which the bank uses paid version of it to build and also using stablecoin project, with more to follow on the platform, the bank added.
Meanwhile SWIFT declined to comment, though the messaging system itself is collaborating with R3 on a number of projects to enable “off-ledger” payment settlement, such as a proof of concept to connect the former’s gpi to the latter’s Corda .The results of this PoC will be revealed at Sibos 2019.
The Corda Network’s open-source payments engine, Corda Settler, has also been tested with the cryptocurrency XRP.
However, Wells Fargo scotched any suggestion the bank would be connecting its digital coins to anything outside its own internal payments systems.
A spokenman from the bank said “R3’s Corda Enterprise was selected as the platform for our first enterprise DLT network, not CordaSettler,” .
“Wells Fargo Digital Cash will not be associated or connected to any other potential digital cash solutions emerging in the financial services markets today as it is an internal settlement service.
Wells Fargo’s coin is potentially very useful for simplifying the “bank’s byzantine internal processes, stated Alex Lipton, a former bank executive, trader and quant, maintaining that it’s not something that will see much usage outside the bank and also a handful of close partners.
“Large banks are so bad that they have to use SWIFT like everyone else, so in effect, But it is a sign of desperation,” Lipton, now co-founder and chief technical officer at fintech firm Sila stated that Large banks are so bad that they insist on SWIFT . They are desperate that they don’t differentiate between inside and outside of banks. So, a coin can help.
Could be another JPM Coin?
Well Fargo’s digital cash may appear to be another JPM Coin at first taking, the much-vaunted technology which was built using Quorum, the privacy-centric version of ethereum developed by JPMorgan.
he coin will later be used to digitally fund enterprise blockchain projects such as on-chain debt issuances, JPMorgan executives have said, though initially structured for payments between client.
On its Interbank Information Network (IIN), which uses Quorum to eradicate pain points in the way information circulates within foreign correspondent banking. JPM also boasts 344 banks that uses Quorum
Frazier absolutely waved off any any similarities between JPM Coin and Wells Fargo Digital Cash, stating they are quite different “.
Wells Fargo is not a member of IIN, but Frazier hinted at a long-term plan for interoperability as all kinds of things could happen by the time they are ahead of the early beginning stage she stated further.
Credits: Daniel Craig,JOIN OUR COMMUNITY