GLOBAL FINANCE ON THE BLOCKCHAIN: AN INTERVIEW WITH R3’S CHARLEY COOPER

2017-09-04

Business Strategy, Blockchain Standards, Financial Services

Made up of the world’s leading financial institutions, R3 has been one of the most high-profile names in blockchain and DLT development since its inception in September 2015. The enterprise software firm has grown exponentially over the past 18 months from an initial nine members to now over 100 members from various industries and is perhaps best known as the creators of Corda, the open source DLT platform making waves across global finance. OnTheBlock recently spoke to R3’s Managing Director to find out more about R3’s recent developments with Corda. Charley Cooper has an impressive résumé, including roles at the US Commodity Futures Trading Commission and the Pentagon. He has also worked as Global Head of Legal Operations in the risk management division of Deutsche Bank, and most recently, Chief Operating Officer at State Street Global Exchange.

OnTheBlock: Charley, having worked at some of the most prestigious financial institutions in the world as well having a wealth of experience within public policy, how is it that you came to join R3?

I’ve been very fortunate over the course of my career, and R3 is the latest example of that. To be honest, I joined R3 almost by accident. Our CEO David Rutter and I met across a negotiating table in our prior roles, and to put it mildly, we got off to a rocky start. Yet over the course of months of tough negotiating, we came to respect and like each other. When David decided to launch R3, he laid out his vision for the future of financial services and asked me to join him. I jumped at the chance.

OnTheBlock: For some of our readers who are not so familiar with R3’s activities, could you briefly describe how it came into existence, who is involved and what are its main activities?

R3 is an enterprise software firm working with over 100 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop Corda, our distributed ledger platform designed specifically for financial services.

Launched in September 2015, R3 was born out of a common frustration amongst banks and other financial institutions with multiple generations of disparate legacy financial technology platforms that struggle to interoperate, causing inefficiencies, risk and spiralling costs.

Our Corda platform is the outcome of over two years of intense research and development by R3 and our members. It meets the highest standards of the banking industry, yet is applicable to any commercial scenario. With Corda, participants can transact without the need for central authorities, creating a world of frictionless commerce.

OnTheBlock: Building a consortium with some of the world’s most prestigious and indeed competitive organisations is no walk in the park, how is it that so many institutions managed to come together to invest in and pioneer cross industry innovation?

One of our biggest advantages has always been our consortium approach. Our ability to bring together the largest financial institutions in the world to collaborate and explore the next generation of financial technology has proved to be leaps and bounds the most effective way to propel distributed ledger technology to widespread adoption. We believe the impact of this technology is highly dependent on its network effect. With over 100 members from all corners of financial services, the critical mass we have built means our members can be confident they are helping develop industry standard solutions that will be the building blocks of the new financial services infrastructure.

OnTheBlock: Corda, R3’s open-source distributed ledger platform is built to improve security and efficiency for wholesale financial markets, how exactly is this possible and what does this mean for the market?

R3 is the only player in this space that has rethought distributed ledger technology from top to bottom. We are the only people who stopped and asked what made this technology relevant and suitable for highly-regulated banks operating in complex global markets.

Our Corda platform is heavily inspired by and captures the benefits of blockchain systems, but with design choices that make it able to meet the needs of regulated financial institutions. Crucially, Corda restricts access to data within an agreement to only those explicitly entitled to it, rather than the entire network, and uses advanced encryption and identity protocols to ensure the highest levels of security.

Corda’s approach to data privacy and security is ground-breaking compared to traditional permissionless blockchains which do not provide this functionality, rendering them unfit for purpose in wholesale financial markets

OnTheBlock: Many pundits in the finance and fintech space see Blockchain and distributed ledger technology as an opportunity for new market players. This can be certainly seen with the growth of new global consortia as well as the recent trends in initial coin offerings skyrocketing some pioneering start-ups into fame. Do you believe that we will also see challenger institutions arise within wholesale finance who can take advantage of such platforms as Corda?

We are not developing distributed ledger technology to supersede financial institutions but rather to enhance them. Distributed ledger technology provides a wide range of opportunities for wholesale finance and the financial industry in general. We envision a financial ecosystem where banks are able to reduce their costs while simultaneously increasing their efficiencies. We believe markets will move towards models where parties to financial agreements record them once and collaborate to maintain accurate, shared records of these agreements.

On The Block: Finally, it is apparent that blockchain and distributed ledger technology has the potential to drive new forms of innovation across all sectors as well as the ability to blur the lines between industries and service providers. Where do you believe will be most significantly changed in the blockchain enabled world?

We believe that blockchain-inspired distributed ledger technology has the potential to transform the financial services industry by increasing efficiency, cutting costs and reducing risk. Implementation of distributed ledger technology will mean financial agreements can be recorded and automatically managed without error and participants will have the potential to transact seamlessly for contractual purpose without friction. Duplications, reconciliations, failed matches and breaks will be things of the past. Isolated islands of asset representations will be no more. This is a huge opportunity to improve the way the financial sector does business.

You can find out more about R3, Corda and Charley’s work on their website, located here.

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