Finteum, whose clients are major retail and investment banks internationally, aimed to create a global financial market for intraday lending on Corda.
The Client
- Objective: To create a global financial market for intraday borrowing, built on Corda.
- Services: Research, Interactive Design, User Experience, Front-end development, Back-end development, Corda development.
- Results: We delivered a scalable CorDapp with a polished interface and complex back-end system in just five weeks.
- Year: 2019
The Challenge
While many banks are facing earlier cash demands or inadequate forecasting and not enough alternatives to meet business needs, others have short-term cash surplus and crave to earn a return on the excess funds.
- Blockchain perspective
Distributed Ledger Technology technology grants the flexibility needed for better coordination of mutual transactions between business partners. Every transaction occurs automatically when certain conditions are met which enables greater versatility in the timing and reduced closing costs as part of an algorithm for an application. Further, this process doesn't include intermediaries or central authority with the power to modify, filter or meddle with the information in any way.
- UX Perspective
Keeping the user in mind, we skillfully built a simple, one-page web application that encompasses multiple, complex functionalities and processes. The focus was given to the app's flexibility to different user roles.
The Solution
While most finance DLT applications just replicate transactions on-ledger to lower costs and increase transparency, Finteum’s objective is to create an entirely new global market for interbank intraday liquidity.
Watch the brief introduction to Finteum and its importance to banks.
- How it works
Finteum's market structure is analogous to the one described in the paper that Finteum co-authored with R3 and Baringa Partners. It allows banks to create orders that are then coordinated by Finteum and directed to a central counterparty that functions as the legal counterpart for all stakeholders. This is different from how centrally cleared trades work today because the initial margin would be different. This structure provides banks with the anonymity needed to continue transacting in the market during a stress event.
- How we made it
In the front end, traders register their orders to borrow or lend, specifying a set of parameters (currency, amount, duration, etc.) These orders are recorded in the participants’ Corda node. In the back end, the central clearing counterparty (CCP) node receives the orders, matches them and trade is automatically created. This process allows only the relevant parties to see the trade, eliminates the need for reconciliation and provides a single source of truth and instant settlement. It's all possible thanks to Corda features which allow anti-money laundering (AML) and know your customer (KYC) checks to be managed separately. An oracle node provides live interest rate information, and a regulator node can observe the trades as they occur, allowing for simplification of the reporting process.
Technologies
The app is built on Corda, an open-source blockchain platform, developed by R3 and a community of developers specifically for the finance industry. It is flexible and scalable, ensuring the highest level of privacy and security. Leveraging the platform, the Finteum CordApp provides predictable, automated processes, instant settlement of trades, the potential for live reporting of information to regulators and seamless interoperability with other CordApps.
- React
- TypeScript
- Spring
- Corda
