With more than $100m in funding finally in the books, distributed ledger consortium R3 is setting its sights on moving critical projects to pilot.
First up may be Japan-based financial giant Mizuho, which is now in the process of building what could be the first live implementation of R3's Corda platform. Constructed with professional services firm Cognizant, the partners involved believe that the coming trade finance solution will reduce fraud, increase transparency and enhance the shift away from paper records.
Ikuma Ueno, digital strategist at Mizuho, told CoinDesk that the bank has used Corda for other projects in the past, but that this forthcoming project marks the first time it will seek to move the software into production.
According to Ueno, Mizuho will use Corda to digitize documents like letters of credit and bill of lading invoices, which are primarily paper based today.
Cognizant itself has been experimenting with several different distributed ledgers and blockchains for enterprise, according to Lata Varghese, assistant vice president in charge of the consulting firm's blockchain projects, but it settled on Corda for this project.
Beyond being a significant milestone for Mizuho, Varghese said the project is a potentially valuable touchstone on the progress of R3 itself.
Varghese told CoinDesk:
Going forward, Mizuho will now have to convince its trading partners to join the pilot execution of this platform. Still, its implementation may well be the first major use case for R3 that goes well beyond the proof-of-concept stage.
Competition begins to heat up
While the partnership is significant because of Mizuho's involvement, it is perhaps also distinguished by being a large-scale application of Corda, which has yet to be adopted in production systems.
Striking out on its own, JPMorgan has own released its own blockchain solution, called Quorum, an ethereum-based platform for enterprise use. At the same time, Hyperledger and the Enterprise Ethereum Alliance, a newer consortium effort, count many members in common with R3.
But the move by Mizuho is a reminder that behind the scenes other progress is being made.
Last month, investment management software firm Calypso completed a real-time trade matching test using Corda. The trial connected ING in the Netherlands, Westpac in Australia and Banco de Credito del Peru in Peru.
In conversation with CoinDesk, R3 project lead Chris Khan, distinguished the consortium's technology, saying it was built from the ground up to serve financial institutions, instead of being build for more general purposes and adapted after the fact.
Going forward, the biggest hurdle is likely to be regulatory, much like for other finance sector projects trying to deploy blockchain tech.
According to Areiel Wolanow, former IBM ASEAN blockchain leader and currently managing director of Finserv Experts, the challenge for distributed ledger technology broadly is that the institutions involved have to share their data.
But Corda's design sidesteps this issue, according to project participants.
"[On blockchain] all the data is distributed to participants, but the beauty of Corda is that it doesn’t share to everybody," said Uneo, adding:
However, Mizuho’s ability to deploy this eventual solution on a global basis will require regulatory changes. As it stands, the bill of lading must be submitted by paper for cross-border trading, according to Ueno: "That's the law, right now it cannot be digitized fully."
"What we’re trying to do with this project is create gravity or create momentum by proving that this technology will actually streamline the current processes," he said.
Cargo ship image via Shutterstock
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