Microsoft Moves to Mainstream Blockchain in Financial Industry

 
 
By Pedro Hernandez  |  Posted 2016-04-04 Print this article Print
 
 
 
 
 
 
 
blockchain

The software giant teams with R3 to help create a cloud-powered, enterprise-grade blockchain ecosystem for the financial services industry.

Microsoft has partnered with the R3 blockchain consortium to help speed up development of distributed ledger platforms for the financial services industry, the Redmond, Wash., software maker announced April 4 during its inaugural Envision conference for business leaders in New Orleans.

Blockchain is best known as the technical foundation of Bitcoin and other cryptocurrencies. Hailed as a transparent and tamper-resistant way of transacting business, so called FinTech (short for financial technology) companies and startups are flocking to blockchain as a means to build efficient next-generation banking, payment and trading systems.

R3 is an international consortium of 43 financial institutions. Member banks include Bank of America, Deutsche Bank, J.P. Morgan, Royal Bank of Scotland and Wells Fargo, to name a few. Last month, the group announced it had successfully completed a trial involving trading fixed-income assets between 40 banks' distributed ledgers across five blockchains.

During an April 4 keynote presentation, Microsoft CEO Satya Nadella noted that R3 "is using blockchain technology that is available on Azure as a service to fundamentally transform how transactions happen and how settlements happen inside of financial institutions."

Part of last month's test was powered by Microsoft's Azure cloud computing platform. IBM Cloud and Amazon Web Services (AWS) were also used to host the distributed ledgers for the trial.

Microsoft made an early bet on a cloud-powered blockchain technology market when it debuted its Azure blockchain-as-a-service late last year. In the months since its debut, the company has been gathering a steady stream of supporters and blockchain application makers, including BitShares, Lisk and Slock.it.

In the same way the Internet has helped bring about the sharing economy, same-day shipping services and instant video streaming, blockchains can help banks and other financial firms complete transactions with the same immediacy, while strengthening security, improving transparency and lowering costs. 

"Today, there is a lot of time delay between a transaction and when the money flows, and there's a lot of cost," noted Nadella during his speech this morning. "And [by] using this distributed ledger technology and blockchain, you can change the landscape of the financial industry."

Peggy Johnson, executive vice president of Business Development at Microsoft, in a statement said the technology "modernizes legacy financial processes, so trades of assets like stocks and bonds can be finalized in minutes, not days. And by enabling a more direct transfer of ownership, it eliminates the need for middlemen like clearing houses, both cutting costs and greatly reducing the risk of fraud."

The company's blockchain ambitions extend well beyond FinTech, hinted Nadella. While on-stage, he added that blockchain has the potential to transform health care, manufacturing supply chains and the public sector.

Meanwhile, the race to bring blockchain to the enterprise is heating up.

In February, during the IBM PartnerWorld Leadership Conference, IBM announced new blockchain services on IBM Cloud for developers. IBM is also exploring using its Watson IoT Platform to enable Internet of things (IoT) data on blockchain.

 
 
 
 
 
 
 
 
 
 
 
 
 

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