Bank of England adapts its payment system for blockchain

The UK’s central bank says that the new payment system should be able to interact with fintech firms which use distributed ledger technology (DLT). It is expected that this step will help to develop blockchain in Britain.

The BoE is going to revamp the system that supports British banking and trading by 2020. The main goal is to strengthen the protection against cyber-attacks and increase the number of companies using this system. RTGS is a real-time gross settlement system. It handles transactions worth approximately 500 billion pounds annually. This is almost a third of the annual production of the UK.

To understand what improvements are needed, the Bank of England in March of this year announced its “proof of concept”. Companies including R3, Cat Systems, Token and Clearmatics Technologies Ltd were asked to test the updated RTGS service and check how much functionality will be increased when using new technologies. As a result, all participants confirmed that the updated RTGS service is matching for connecting and making payments.

Ruslan Yusufov, the Director of special projects at Group-IB:

The perspectives of using blockchain in modern payment systems are beyond doubt. Familiar to us systems such as SWIFT or SEPA, work as regulators and trust centers, which complicates the payment infrastructure, slows down the process of transferring finances and has many vulnerabilities to hacker attacks.

According to expert, “the introduction of blockchain into banks in the future can radically transform the nature and quality of bank transfer services, so that they are able to reach a completely different level”.

Thus, as Ruslan Yusufov says, “it is possible to increase the speed of transactions and reduce the fee for the transfer of funds, as well as ensuring a higher system security against the threats of IS. According to a study by the Accenture consulting company “Banking on Blockchain”, blockchain technology will help investment banks to reduce the cost of infrastructure support. We speak about very impressive amount: by the end of 2025 the savings on operating costs will be from $8 to 12 billion”.

According to Ruslans’ opinion, the decision of the Central Bank of England to introduce blockchain will certainly affect the development of the market and will encourage other market participants to use new technologies for business transformation.