Dutch banking group ING has called cryptocurrency a “significant” potential disruptor for the banking sector as it plans to focus increased investment in the space.
“The key enterprise value is twofold: blockchain-based solutions will introduce efficiencies to existing processes, thereby reducing transaction times, and costs alongside improving privacy and security standards,” Mariana Gomez de la Villa, Senior Program Manager Blockchain at ING, said.
The firm has put its money where its mouth is in the past year, investing heavily not only in primary technology research in the space but also in testing and implementing solutions.
As part of this effort it has partnered with cryptocurrency developer Ripple and is believed to be exploring wider roll-out of the firm’s xCurrent system.
“The Dutch bank of ING just announced that they are going to use Ripple for international payments,” a spokesperson for Ripple said late last year.
Usage analysis of Ripple’s latest validator suggests that a New York-based subsidiary of Dutch bank ING may now be partnering closely with Ripple not only in the testing but also the development of banking grade solutions.
“Node provision, IT support and other details have to be concluded in advance to make sure everything runs smoothly during the pilot,” Gomez de la Villa said.
The move ties in with new research ING published last year modifying an area of cryptography known as zero-knowledge proofs. This abstract tool promises to offer financial institutions the benefits of shared ledgers while keeping key data private from competitors.
ING’s modified version called “zero-knowledge range proofs,” now uses less computational power and therefore runs faster on a blockchain and is part of ongoing research efforts by the firm.
“When it comes to blockchain adoption specifically, ING considers this technology to be a key element in the future of financial services…. ING’s approach is driven by the willingness to experiment and adopt new technologies with support from senior management.,” Gomez de la Villa added.
ING believes trade finance processes are the best bet for disruption at present, with trials suggesting blockchain can reduce conventional documentation exchanges from an average of five to ten days to just 24 hours.
“Collateral lending is also likely to be disrupted by blockchain technology as ING, together with Credit Suisse, demonstrated with the first-ever live securities trade. Applying DLT/blockchain to this financial service has the potential of making collateral lending faster, easier and more efficient by creating a more transparent marketplace for exchanging assets,” Gomez de la Villa added.