The Royal Bank of Scotland has worked with the UK’s Financial Conduct Authority (FCA) and New York-based software company R3 to develop a blockchain mortgage application aimed at improving the regulatory reporting of transactions.
The system, which was built using R3’s blockchain called Corda, enables banks to generate automated delivery receipts for the regulator each time a mortgage is booked. The organisations hope that it can reduce the cost of the process and the risk of error.
Blockchain, which first came to prominence as the system underpinning crypto currency bitcoin, is a shared record of data maintained by a network of computers on the Internet that can be accessed by all authorised parties.
Financial institutions have been investing in its development in the hopes that it can help reduce their back office costs and complexity. Proponents of the technology suggest that it is ideally suited for simplifying record-keeping.
The FCA prototype “can give the regulator a new tool capable of overseeing mortgage activity much more quickly and efficiently than before whilst greatly reducing data inconsistencies,” said Richard Crook, head of emerging technology at RBS.
Blockchain mortgage app’s live testing
Participants in the project will continue to work toward a live testing phase, which is expected to involve other lenders and regulatory bodies, R3 said.
Regulators across the world are looking to increase their use of innovative financial technology to become more efficient. The FCA has been leading the way globally on this initiative, having launched a dedicated division almost three years ago.
RBS recently established a technology and innovation committee and a fintech hub at its Gogarburn HQ. The bank also has an extensive scouting network for new tech-led initiatives, which takes in the UK, US and Israel. It recently introduced Facebook at Work for its employees, deployed AI to help answer customer queries and biometric technology to crack down on fraud.
Pictured: Royal Bank of Scotland’s innovation centre.