Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Cloud

10/17/2017
05:45 PM
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Banks Start Broad Use of Blockchain, as JP Morgan, IBM Lead Way

Two major players announced cross-border payment networks built on blockchain technologies Monday, and more financial services will follow soon, despite opinions about Bitcoin.

The distributed ledger technology that underpins cryptocurrency like Bitcoin is rapidly going mainstream. Blockchain is building a tremendous amount of buzz as technology and financial industry heavyweights and startups race to apply the technology in innovative new applications for the banking sector. Their efforts are starting to bear fruit in the area of cross-border payments, as three separate announcements from IBM, J.P. Morgan, and Bank of Canada highlighted this week. 

Each company announced their own flavor of payment network solutions built on blockchain technology. Working in conjunction with technology partners Stellar.org and KlickExGroup and over a dozen financial institutions, IBM rolled out a banking product that leverages its IBM Blockchain platform. The project, announced Monday, is designed to clear and settle financial transactions worldwide in near-real-time.

The ultimate goal is to provide a secure, speedy and transparent financial platform between global markets that may have found it difficult to do business with one another due to the bureaucratic pitfalls of legacy international payment networks.

That's a similar goal shared by J.P. Morgan, which together with partners Royal Bank of Canada and Australia and New Zealand Banking Group Limited also Monday launched the Interbank Information Network (IIN). It's a cross-border payment network built upon Quorum, J.P. Morgan's internally developed blockchain technology. According to J.P. Morgan, its first two banking partners are just the start for IIN and other correspondent banks are expected to join soon.

Tuesday, the Bank of Canada, Payments Canada and TMX Group Ltd, operator of the Toronto Stock Exchange, announced that they will get together to test the use of blockchain for automating securities settlement.

J.P. Morgan's commitment to Quorum and blockchain capabilities are interesting considering its CEO Jamie Dimon's well-documented dismissal of Bitcoin as a "stupid" idea. Clearly, his bank isn't one for throwing the baby out with the bathwater.

The developments this week underline that banking executives are increasingly seeing the upside of combining distributed ledgers with solid cryptographic applications for new means of facilitating payments, trades, contracts, and transactions of all stripes.

"The technology is particularly useful when you combine a distributed ledger together with a cryptotoken,” wrote MIT Sloan Assistant Professor Christian Catalini in an explainer piece from MIT earlier this year. “Suddenly you can bootstrap an entire network that can achieve internet-level consensus about the state and authenticity of a block’s contents in a decentralized way. Every node that participates in the network can verify the true state of the ledger and transact on it at a very low cost. This is one step away from a distributed marketplace, and will enable new types of digital platforms.” 

For security and risk professionals, blockchain stands as an especially appealing option because it is a technology that's essentially security native; its fundamental design from day one has kept security top of mind.

"Blockchain is designed with security in mind and can help optimize processes," says Bob West, a former banking CISO and current CEO of consultancy Echelon One. Moving beyond announcements like the ones Monday, other examples of optimized processes would be the settlement of stock trades. "The settlement of stock trades could become close to real-time if blockchain were used throughout the trading supply chain."

The trick will be convincing senior executives it can add value to the business, West says, eplaining that he believes it will be three to five years before the financial sector adopts blockchain broadly.

[Bob West will discuss "Creating and Managing User Identities in the Real World" at the upcoming INsecurity Conference, Nov. 29-30 in the D.C. area. See the full agenda at https://insecurity.com.]

Others agree it's going to take time including Brian Conneen, CIO and CTO of Marlette Funding, an online lending company. He says his team is "keeping a close eye on blockchain" as they look for ways to put it to use in their business. 

"The biggest challenge today to leveraging blockchain is that many large players have not yet bought into the nascent technology, most likely due to unfamiliarity or in some cases lack of central control," Conneen says.  "We are still a few years from reaching critical mass, but once a few major players leverage blockchain in a way that is core to their business, the acceleration to adoption will be exponential."

Related content:

 

Join Dark Reading LIVE for two days of practical cyber defense discussions. Learn from the industry’s most knowledgeable IT security experts. Check out the INsecurity agenda here.

Ericka Chickowski specializes in coverage of information technology and business innovation. She has focused on information security for the better part of a decade and regularly writes about the security industry as a contributor to Dark Reading.  View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Basic BlackT927
50%
50%
Basic BlackT927,
User Rank: Apprentice
10/29/2017 | 8:36:02 PM
Great Article
Thanks for the well written article, great read!  I am a business owner and have had my own issues with merchant services and the ourtragious fees they have.  But, I understand the importance of moving into the direction of automation with security.
Exploits Released for As-Yet Unpatched Critical Citrix Flaw
Jai Vijayan, Contributing Writer,  1/13/2020
Microsoft to Officially End Support for Windows 7, Server 2008
Kelly Sheridan, Staff Editor, Dark Reading,  1/13/2020
Active Directory Needs an Update: Here's Why
Raz Rafaeli, CEO and Co-Founder at Secret Double Octopus,  1/16/2020
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win a Starbucks Card! Click Here
Latest Comment: This comment is waiting for review by our moderators.
Current Issue
The Year in Security: 2019
This Tech Digest provides a wrap up and overview of the year's top cybersecurity news stories. It was a year of new twists on old threats, with fears of another WannaCry-type worm and of a possible botnet army of Wi-Fi routers. But 2019 also underscored the risk of firmware and trusted security tools harboring dangerous holes that cybercriminals and nation-state hackers could readily abuse. Read more.
Flash Poll
[Just Released] How Enterprises are Attacking the Cybersecurity Problem
[Just Released] How Enterprises are Attacking the Cybersecurity Problem
Organizations have invested in a sweeping array of security technologies to address challenges associated with the growing number of cybersecurity attacks. However, the complexity involved in managing these technologies is emerging as a major problem. Read this report to find out what your peers biggest security challenges are and the technologies they are using to address them.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2019-15625
PUBLISHED: 2020-01-18
A memory usage vulnerability exists in Trend Micro Password Manager 3.8 that could allow an attacker with access and permissions to the victim's memory processes to extract sensitive information.
CVE-2019-19696
PUBLISHED: 2020-01-18
A RootCA vulnerability found in Trend Micro Password Manager for Windows and macOS exists where the localhost.key of RootCA.crt might be improperly accessed by an unauthorized party and could be used to create malicious self-signed SSL certificates, allowing an attacker to misdirect a user to phishi...
CVE-2019-19697
PUBLISHED: 2020-01-18
An arbitrary code execution vulnerability exists in the Trend Micro Security 2019 (v15) consumer family of products which could allow an attacker to gain elevated privileges and tamper with protected services by disabling or otherwise preventing them to start. An attacker must already have administr...
CVE-2019-20357
PUBLISHED: 2020-01-18
A Persistent Arbitrary Code Execution vulnerability exists in the Trend Micro Security 2020 (v160 and 2019 (v15) consumer familiy of products which could potentially allow an attacker the ability to create a malicious program to escalate privileges and attain persistence on a vulnerable system.
CVE-2020-7222
PUBLISHED: 2020-01-18
An issue was discovered in Amcrest Web Server 2.520.AC00.18.R 2017-06-29 WEB 3.2.1.453504. The login page responds with JavaScript when one tries to authenticate. An attacker who changes the result parameter (to true) in this JavaScript code can bypass authentication and achieve limited privileges (...