Signature Bank adopts Ethereum blockchain, develops new platform based on it to facilitate real-time cross-border payments for its institutional clients.
Blockchain might have been formalized by the new kind of financial system born out of cryptocurrencies, but the technology is increasingly finding its place in the world of traditional finance. More and more financial institutions are adopting it, and that is paving the way for a world in which blockchain can act as a bridge between both legacy as well as crypto-based financial systems. The latest institution from the world of legacy finance to embrace blockchain is Signature Bank of New York.
Signature Bank is a major commercial bank in New York providing banking services to a number of corporations. Recently it developed a new real-time payments platform based on the permissioned version of Ethereum blockchain, and now that platform has been approved by New York Department of Financial Services (NYDFS), thus clearing the way for its application.
The platform, called Signet Platform, has been developed in partnership with trueDigital Holdings of New York. It allows Signature clients to move money in 30 seconds, 24×7, by converting US dollars into ERC-20 compliant tokens. By comparison the payments made from traditional platforms like SWIFT and Automated Clearing House (ACH) take at least 3 days to process and don’t work on weekends. This leads to lost business opportunities. Fortunately, this won’t be the case with Signet.
Now, while Signet platform will serve the clients of Signature Bank only, this may be the start of a new blockchain-based financial order for international trade. Other banks may also develop similar platforms in near future, paving the way for direct communication between banks to facilitate international transactions. Intermediaries like SWIFT and ACH may be marginalized, thus delivering a major blow to their business. Banks that don’t accept blockchain may also run out of business within a few years, which is the risk that Signature Bank managament was quick to realize. Signature CEO Joseph J. DePaolo said about their adoption of Ethereum:
“We have to do this, otherwise we’re not going to exist. If you’re not involved in blockchain, in five years, you won’t be around as a bank.”
As of now Signet platform will work with its native Signet tokens alone, but there’s a chance that other tokens may also be added in future. trueDigital Founder Sunil Hirani said on the matter that adoption of other tokens may significantly reduce the costs, so adding them is only a matter of time. Let’s see when that happens.