R3 Bank Partner Northern Trust Details Four Internal Blockchain Tests

R3CEV's test with Northern Trust inspired a blockchain proof-of-concept among three other experiments for different aspects of asset management.

AccessTimeIconMay 16, 2016 at 6:03 p.m. UTC
Updated Sep 11, 2021 at 12:16 p.m. UTC

Back in January, Chicago-based asset management firm Northern Trust was part of a group of international financial institutions to complete a blockchain test with the R3CEV banking consortium.

The firm, which has $900bn in assets under management, has since gone on to replicate that test for an internal proof-of-concept, and added three new proofs-of-concept to its ongoing body of work centered on the technology.

While Justin Chapman, global head of process management for the firm, says the proofs-of-concept are part of a larger effort to meet both internal and customer demands, he explained that there was justification to be cautious.

Chapman told CoinDesk:

"[Blockchains] aren't going to be applicable to every market and every function. What that does is give us a better idea of how we participate in the ecosystem."

Building from the test

In January, Northern Trust was one of 11 companies to conduct a distributed ledger test built on a private version of the Ethereum blockchain. The group included banks such as Barclays, Credit Suisse and Commonwealth Bank of Australia, among others.

Northern Trust first joined the consortium of more than 40 financial institutions in December of last year.

Chapman said one of Northern Trust’s proof-of-concepts constituted a test of how both cash and securities transactions can be enhanced using the same functionality achieved during that R3 test.

"We’ve mimicked that internally," said Chapman, who helps oversee the firm’s blockchain research. "It’s sort of the building block for how the underlying work flows."

In addition, Northern Trust has built one proof-of-concept that shows how operational accounts can be created by way of a blockchain. Another explores the potential interoperability between Northern Trust, regulatory bodies and other financial institutions connected via a theoretical network.

A fourth experiment involved customer identification requirements during account creation. Designed to help streamline the identification of clients across different institutions, this particular concept "proved to be a very successful use of the technology," according to Chapman.

Though Northern Trust worked with "a number of market partners" on the identification test, Chapman said non-disclosure agreements prevented him from revealing those partners.

Culminating effort

Northern Trust began looking into blockchain technology 18 months ago, according to Chapman, and in the last three months the company has begun seeing significant levels of interest among its client base, both in terms of learning about the technology more broadly as well as exploring specific applications.

While some of those interested parties have also expressed a willingness to participate in future tests, Chapman said the short-term benefits of the technology appear to be largely limited to cutting down on paperwork associated with asset management.

Industry-level change, on the other-hand, he says, won’t likely come about for another decade.

Chapman concluded:

"What it really does is let you reimagine the way the market works [in a way] that should remove the friction for the way we do business."

Tool belt image via Shutterstock.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.