American financial services company Wells Fargo & Company is planning to launch a pilot of a distributed ledger technology-based internal settlement service in 2020.
American financial services company Wells Fargo & Company is planning to launch a pilot of a distributed ledger technology (DLT)-based internal settlement service in 2020.
In a Sept. 17 press release, Wells Fargo described a DLT-based platform designed to perform internal book transfers of international payments within its global network using digitized cash. The company claimed that it has already successfully tested the concept of money transfers between the United States and Canada.
Achievement of nearly real-time money transactions
The impetus for the idea was the realization of nearly real-time money transactions with no impact on the underlying account, transaction postings and reconcilement infrastructure with cross-border transactions. DLT will also ostensibly help the company to eliminate the need for third parties and cut transfer time and transaction costs.
Lisa Frazier, head of the Innovation Group at Wells Fargo, said that the company has seen increased demand for further reduction of friction regarding traditional borders, with DLT being able to aid in the issue. Frazier stated:
“We believe DLT holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.”
Transformative power of blockchain
The news comes just a day after a Bank for International Settlements economist Raphael Auer made the case for so-called embedded supervision, which would automatically monitor tokenized markets. Auer argued that DLT and smart contracts can facilitate the development of financial markets through new forms of transparency and data credibility, and eventually exclude middleman-based data verification.
Earlier in September, information technology service management giant Gartner predicted blockchain’s transformative power for most industries within 10 years. Per Gartner, nearly 18% of banking and investment services CIOs say that they have adopted or plan to employ some form of blockchain technology within the next 12 months. Another 15% plan to do so in the next two years.