The UK’s Financial Conduct Authority (FCA) regulatory body has joined forces with banks and New York software company R3 CEV to develop a blockchain-based application for the regulatory reporting of mortgage transactions.
R3, which leads a consortium of around 80 financial institutions trying to bring blockchain to the finance industry, has announced that is developing the prototype with the regulator, the Royal Bank of Scotland Group (RBS) and another global bank that declined to be named.
The system was built using R3’s Corda blockchain and allows banks to generate automated delivery receipts for the FCA when a mortgage booking occurs. The aim of the prototype is to reduce costs and the risk of errors from the current system.
The involvement of a major financial regulator represents a major step forward for the technology’s adoption by the City of London.
The FCA has shown interest in blockchain technology for some time now, as have a number of other regulators around the world. In 2016 the organisations head of strategy Chris Woodward said:
“[This area] is an opportunity for us to understand how we can best support developments and potentially adopt some RegTech solutions ourselves.”
The announcement of the prototype puts the FCA ahead of the pack internationally.
One of the major purported benefits of blockchain is its role in potentially simplifying record-keeping. Indeed, Reuters quote RBS head of emerging technology, Richard Crook, as saying that 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.”
Another key benefit for the regulator is an anticpated reduction in the amount of work required when processing reports, which are usually sent out in a wide variety of formats.
The project will remain in the live testing phase for the near-term, as the participants look to bring in other lenders and regulatory bodies.
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