London-based blockchain firm Fnality, along with Lloyds Banking Group, Banco Santander, and UBS, have completed the “world’s first” live transaction, using its blockchain-based payment system, the Sterling Fnality Payment System.
The goal is to scale this capability in phases, with the initial phase prioritizing resilience and functionality within the constraints set by the Bank of England.
The growing interest in blockchain technology among banks lies in its ability to enhance transaction security, enable real-time transactions, reduce operational costs, and lower transaction fees. Fnality’s successful live transaction serves as a proof of concept, highlighting the potential of blockchain payment systems in the financial services industry and encouraging broader adoption by other banks.
“We are delighted to see Fnality take the next step in its journey to become a multi-jurisdictional, digital FMI,” said Samantha Emery, Director of Payments Industry and Development at Lloyds Banking Group, in a prepared statement. “The initiation of the Sterling Fnality Payment System is a unique event, which will not only revolutionise settlement but transform the way in which Financial Institutions manage their future liquidity needs.”
How Banks are Exploring Blockchain Technology
Amid the recognition of blockchain’s potential advantages—including enhanced security, efficiency, and transparency in payments—banks are actively exploring its integration.
JPMorgan Chase is currently in the research phase for a blockchain-based deposit token, aiming to streamline payments and settlements. Despite possessing the necessary infrastructure for such payments, the banking giant awaits approval from U.S. regulators before implementing these innovations.
Citigroup is another bank that’s leveraging blockchain technology. In this case, to address cross-border money transfer challenges. Citi Token Services, its blockchain-based cash management and trade solution for institutional clients, converts clients deposits into digital tokens, creating a digital representation of their cash. Clients can make 24/7 instant payments using these tokens.