For those of you who are wondering what R3 is, let me start with an introduction. R3 is an enterprise blockchain software firm working with a broad ecosystem of more than 200 members and partners across multiple industries from both the private and public sectors. It is working with its global network to develop on Corda, its blockchain platform designed specifically for businesses. Corda is supported by over 2,000 technology, financial, and legal experts drawn from its global member base. R3 is backed by investment of over USD 120 million from more than 45 firms.
Here, in an exclusive interview, David E. Rutter, CEO of R3, shares the journey of R3, the future of blockchain and real-world examples of how blockchain is driving transformation in the digital era.
Let us start with getting to know about R3, why and how the company was formed?
David: R3 was born out of a common frustration with multiple generations of disparate legacy financial technology platforms that struggle to interoperate, causing inefficiencies, risk and spiraling costs and a shared belief that blockchain technology holds the key to overcoming this challenge.
R3 was formed in September 2015 when nine leading banks partnered with R3 to design and deliver advanced distributed ledger technology to global financial markets. Today, our ecosystem comprises over 200 tech companies, financial institutions, regulators, trade associations, and professional services firms in six continents. We have built an incredible team of over 180 professionals in 13 countries and are the largest collaborative group of our kind in the blockchain space.
R3 rethought the blockchain concept. Our open source Corda platform is the world’s only blockchain designed to remove costly friction in business transactions by enabling institutions to transact directly using smart contracts, while ensuring the highest levels of privacy and security.
A lot of enterprises still ask “Why blockchain?” What would be your answer to a CEO on Why blockchain?
David: Blockchain technology has the potential to transform everything about business processes across nearly all industries. We designed Corda with a clear vision: the ability for anybody to transact directly with anybody else on an open network, with total assurance that “what I see is what you see’, with assured privacy, and scalability. Blockchain can bring multiple participants to consensus on shared facts in an immutable, permissioned and secure way— removing the need for costly and time-consuming reconciliation.
Operating on shared business logic rather than needlessly and endlessly re-implementing the same non-differentiating systems will massively reduce cost, risk and complexity and open up a world of opportunities for new businesses. I would turn the question on its head - why not blockchain?
What are the challenges for enterprises who are keen to embark on the blockchain journey?
David: First, I think it’s critical at this stage that businesses pick the right solution with the right vision and technology that’s appropriate for enterprise usage both in the near- and long-term. Enterprise adoption will be a phased approach and organizations should choose a blockchain that can easily integrate with the systems that already run their business.
As mentioned earlier, interoperability is also critical. Business networks must be able to transact openly and flawlessly with one another. A trade finance network may want to exchange assets, cash and data with a separate insurance network run by a different organization in a different part of the world. Without this type of interoperability, the value of the blockchain tech will never be fully realized.
A lot of the blockchain adoption across industries is being driven based on the use cases. What are the key use case characteristics for blockchain to be successful?
David: Blockchain has often been criticized as a technology solution looking for a problem. We don’t see it that way but it is true that blockchain isn’t the solution to every problem. Among the hundreds of use cases we have worked on, the most successful have been those that solve a real problem experienced by many institutions typically requiring regular reconciliation of data to keep in-synch with one another.
What is the most fascinating application that you have heard, read or seen on blockchain?
David: There are loads of fascinating and groundbreaking CorDapps being built on Corda so it is difficult to pick one. We have a ton going on in global trade and blockchain insurance space, and we are making huge progress in capital markets, digital assets, digital identity and KYC. We also have applications being developed for oil and gas, healthcare, land registry, analytics, hospitality, etc.
What are the benefits of blockchain to an enterprise or industry?
David: For us, it’s simple. We envision a future where agreements of any kind are recorded and automatically managed without error, where anybody can transact seamlessly for any contractual purpose without friction.
Markets will move towards models where parties to agreements record them once and collaborate to maintain accurate, shared records. Duplications and reconciliations will be things of the past. Isolated islands of assets will be no more. This will not only save businesses time but will reduce costs and errors while creating significant efficiencies.
What are the critical factors for success of a blockchain solution?
David: Industry-wide collaboration is crucial if we are to fully realize the benefits of this technology, which is precisely why we worked to build a vibrant ecosystem of participants with a shared focus on leveraging blockchain.
Interoperability is also critical. With Corda, we set out to build a platform that could support multiple business applications and multiple enterprise tokens all on the same shared network.
Privacy is a key business requirement for most enterprises. Unlike traditional blockchain solutions, Corda only shares transaction data with participants that require it. And thanks to several of Corda’s unique design features it can interoperate extremely well with other platforms too — both blockchain and traditional.
Blockchain will be mainstream by
David: Blockchain is already mainstream, however, we anticipate widespread commercial adoption over the next five years.
R3 by 2020
David: By 2020, R3 will have further expanded its global network, and increasing numbers of live CorDapps will be in operation across industries from financial services, to healthcare, shipping, insurance and more.
Blockchain will change the world …
David: Blockchain will completely transform the way we do business. By having a single, immutable record, lengthy and costly reconciliations will be eliminated, and transactions will become streamlined and more efficient.
About David E. Rutter
With over 30 years of experience leading some of Wall Street’s top institutions, David is a longtime creative thought leader in financial markets and innovation and has played a significant role in the adoption of electronic trading in the global OTC derivatives industry. David served for ten years as the CEO of Electronic Broking at ICAP Plc, the world's largest interdealer broker, where he led the BrokerTec fixed income and EBS foreign exchange platforms. Prior to ICAP, David was co-owner and CEO (Americas) of Prebon Yamane.
About the “Get Blockchain’d with..” publication Series
“Get blockchain’d with..” is a unique thought leadership publication series designed to put the spotlight on blockchain voices and views from across the globe.
Past Publications in this series
Get Blockchain’d with Claude Eguienta, CEO at Telcoin
Get Blockchain’d with Jack Shaw, Co-Founder and Executive Director of the American Blockchain Council
Get Blockchain’d with Dr Gideon Greenspan, CEO of Coin Sciences Ltd
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