Today Wells Fargo announced a blockchain pilot for settlements within the group. The bank plans to launch Wells Fargo Digital Cash, a tokenized currency, over a private blockchain network. The pilot will go live in 2020.
Wells Fargo Digital Cash will be used to complete internal cross-border payments within the group. The bank plans to scale the distributed ledger (DLT) network to other operations in the future. Wells Fargo clarified that its blockchain network will not be connected to any other digital cash solution and is proprietary to the group and its subsidiaries. That said, corporate customers will be able to take advantage of the real-time settlement without needing to make any process changes.
“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,” said Lisa Frazier, head of the Innovation Group at Wells Fargo. “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.”
The financial services company with $1.9 trillion in assets aims to achieve real-time money transfer, with around the clock window to do so. Wells Fargo Digital Cash will only process US Dollars initially, with multicurrency transfers to be introduced later.
It is interesting to see Wells Fargo join the blockchain cross-border payments development, albeit only internally. Earlier this year, former CEO Tim Sloan had expressed dissatisfaction with blockchain. “Personally I think blockchain has been way oversold,” Sloan said in remarks at the Fintech Ideas Festival, reported American Banker. Wells Fargo is an investor in R3. The bank didn’t mention the technology used, but an R3 executive posted on LinkedIn that it uses R3’s Corda.
Competitor JP Morgan previously announced its JPM Coin plans. JPM Coin’s primary purpose is to enable instant settlement of blockchain transactions, starting with bonds. This is similar to Fnality which operates the Utility Settlement Coin backed by 14 global financial institutions.
Last week, Mastercard announced it had partnered with R3 to develop a blockchain-powered cross-border payments solution. One of its aims is to link up domestic payment systems across borders. This is something that the Monetary Authority of Singapore and the Bank of Canada have also explored.
Yesterday, Deutsche Bank joined the JPMorgan Chase-led Interbank Information Network (IIN), a blockchain-based cross-border payment messaging system.
Update: added the technology used as Corda