R3, the fintech startup that raised $107 million dollars of investment earlier this year has announced that it will collaborate with 22 of its member banks to build a blockchain-based platform that will enable cross border payments for both central bank and digital currencies.

R3 says that it expects the prototype to be launched before the end of 2017. The company also insists that the new platform will be the first of its kind anywhere in the world.

Despite a crowded marketplace, with many rival services also attempting to develop a similar international payments product, R3 appear to be ahead of the game:

“This marks a significant milestone for distributed ledger technology”, said R3’s Chief Executive David Rutter. “This solution will be a game-changer for any bank or company whose business relies on making or receiving cross-border payments.”

The project will be hosted on R3’s Corda platform, and the hope is that the DLT will provide a far quicker and more cost-effective solution to current systems, which are increasingly being seen as too slow, expensive, and out of date.

Corda is the product of 2 years of R&D involving 80 of the world’s largest financial institutions, according to R3’s website.

Given developments within the fintech industry that have produced real-time domestic payments systems in many countries, R3 believe that the same must be done for international payments. The new technology, they say, will “improve world trade efficiencies by facilitating instant international payments”, completing transactions in real time that would have otherwise take days to complete.

Not only do current international payments systems take time, but by slowing down processes, they also introduce additional risks such as fraud, settlement issues and a drain on bank’s liquidity.

Banks backing the initiative include Barclays, BBVA, CIBC, Commerzbank, HSBC, Natixis, TD Bank and Woori Bank.

R3’s staff number more than 140 professionals, across nine countries, and expects to complete a third tranche of investment, after raising a total of $107m across 2 rounds to date.

The Money Cloud View

Whilst it’s true that businesses looking to banks to complete their international payments have few options and little room for manoeuvre currently when it comes to making payments overseas, banks, of course, are not the only option.

At The Money Cloud, we allow companies to compare the rate and fees of a handpicked selection of authorised, trusted brokers, and for the foreseeable future, we still believe this to be the best option available to companies looking to make the best deals when sending money overseas.

Without doubt, technology is fundamentally altering the landscape; whether it’s possible to deliver a system that incorporates both digital currencies; bitcoin or ethereum, for example, or even blockchain based currencies that have not yet been created – only time will tell – but the signs are encouraging.

Rest assured, at The Money Cloud we’ll be keeping you up to date, and if DLT delivers on all of its promise, we’ll be hunting for the very best systems for international transfers – and the signs are R3 and Corda will be amongst the first we’ll need to look at, and one of the best, too.

This content is brought to you by The Money Cloud – comparing the best rates for sending money overseas offered by hand-picked, regulated brokers and money transfer agencies.