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IBM Cuts Credit Unions Deal For Blockchain Services In $1.7 Trillion Industry

IBM and Denver-based credit union service organization CULedger, have struck a collaboration deal by which new blockchain-based services will be pioneered to help credit unions provide their members with greater efficiencies and an enhanced user experience. CULedger focuses on delivering “innovative applications” to credit unions via its cross-border global distributed ledger platform.

Specifically, IBM and CULedger, a consortium of credit unions, are to  work together to use permissioned blockchain technologies to create an immutable audit trail, which can be used to create new business models and transform existing business processes for credit unions.

The parties also intend to help foster “greater financial inclusion” by extending the reach of services to a broader range of new members.

IBM Blockchain

The cloud-based IBM Blockchain Platform delivers the end-to-end capabilities, which clients need to quickly activate and develop, operate, govern and secure their own business networks.

CULedger provides advantages to credit unions and their members by reducing risks associated with cybersecurity and fraud, streamlining internal processes and reducing administrative and operational costs.

The adoption of blockchain technology, it is said by the parties, will help “build continued momentum among all demographics”, as well as small and medium enterprises (SMEs) that currently lack access to financial services.

By creating a permissioned blockchain network where services can be shared among all credit unions, CULedger claims that it will improve services such as identification authentication, regulatory compliance around know-your-customer (KYC), lending and payments, while making it easier and more efficient for consumers to conduct any interactions that require authentication.

John Ainsworth, CULedger’s CEO and President, commenting in the wake of news of the collaboration said: “A cooperative model that helps improve the member experience while benefitting all credit unions is the ideal approach to ensuring the next wave of financial innovation for the credit union industry.”

He added: “We are creating a network through which all members can join and access new services and enabling credit unions to become even more competitive while addressing new market dynamics where members are demanding even more for their financial services provider.”

Blockchain’s Potential Value

According to a Gartner report titled “Forecast: Blockchain Business Value, Worldwide, 2017-2030”, the potential value of blockchain or distributed ledger technology [DLT] to the enterprise is expected to grow to more than $360 billion by 2026, and subsequently exceed $3.1 trillion by 2030.

As the financial services industry continues to evolve, blockchain technology is being used to help address consumer demands for safer, faster and more efficient transactions.

Siim Õunap, COO at blockchain and crypto marketing agency Savii Digital, commenting on the IBM/CULedger collaboration said: "As more and more platforms offering financial services are made easier, more transparent and cheaper by using blockchain, it has quickly become the go-to technology for financial services. The deal between  IBM and CULedger is yet another perfect example of financial service that works better with the use of the blockchain. And, in a not so distant future, it will likely become a standard like ISO or perhaps even as a part of 20022." 

Marie Wieck, General Manager, IBM Blockchain, noted that: “Credit unions will be able to cooperate and receive shared value from quickly exchanging sensitive data in a permissioned, individually controlled and transparent way.

Adding that this decentralized approach using blockchain helps put the customer “in control of their own identity”, the executive, who has been at IBM for over 30 years and today focused on driving open ecosystem growth for Blockchain, said: “The work underway between CULedger and IBM will also lay the foundation for new kinds of services and collaboration among credit unions as we work together to scale and extend the network.”

Over time, IBM, a recognized leader in Enterprise Blockchain, and CULedger are to expand the scope of the collaboration to use blockchain to support other services such as know-your-customer (KYC) and know-your-supplier regulatory requirements. Initial services on the CULedger blockchain network will be available to credit unions worldwide beginning later in 2019.

Given given IBM’s experience in the blockchain space across the industry spectrum, if anyone can cut it it would be Big Blue one would think, whose stock price is up 19.6% ($22.18) year to date. That said, over the past one year since March 12 2018 it is 15.7% (-$25.17) off the $160 mark.

For the full article, please visit Forbes.

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