SC Ventures, Landesbank Baden-Württemberg (LBBW) and financial software specialist Comyno have agreed to invest in DekaBank’s SWIAT, a blockchain platform that enables real-time settlement and trading of traditional and digital data, assets and transactions.
The joint venture — which is expected to close in H1 2023 — will combine the strengths of the three founding banks with Comyno’s technology expertise to create a uniform standard for processing blockchain-based securities.
The joint venture participants hope to provide software that will create a decentralised financial infrastructure and frictionless, real-time settlement in multiple use cases, including securities lending, repurchase agreements, derivatives and bond issuance.
Expected to reduce cost, improve risk management and conduct business in these areas with greater flexibility, Comyno says the move to invest in DekaBank’s SWIAT will enable economies of scale and create new business opportunities, such as providing custody services.
Established by DekaBank in February 2022, SWIAT is a software developer for blockchain-based digital financial services platform for regulated financial market players to flexibly issue, trade and settle any type of asset — traditional or digital — on the blockchain.
DekaBank determined from the beginning that the platform would be open to partners to be built as a market consortium, and eventually expanded into an international network.
Martin Müller, member of DekaBank's board of management, says that there is no uniform standard for issuing, trading or settling digital assets. He indicated that such a standard would “significantly simplify what is at present, a very fragmented process”.
“Only with other financial institutions coming on board would it be possible to develop and establish such a standard on the blockchain for the financial sector, so in essence, SWIAT really relies on multi-party cooperation,” Müller explains.
Dirk Kipp, global head of markets at LBBW, adds: “SWIAT is an opportunity for all of its shareholders to jointly build up know-how and, at the same time, create their own digital products and services for blockchain-based securities settlement. This move will enable our customers to participate in that digital transformation."
Alex Manson, head of SC Ventures, explains: “SWIAT is a solution for the financial sector being built at institutional grade by banks, for banks. It not only provides a platform to save costs and achieve economies of scale, but enables better risk management and audit trails through the use of the latest generation of technology.
“As one of the lead investors, SC Ventures is convinced that the current use case is the precursor for many others, with the bulk of the settlement industry moving gradually to blockchain protocols. We invite all other banks to try it for themselves."
Comyno’s founder and CEO Markus Büttner concludes: “Compared to classical centralised infrastructure, the two big advantages of decentralised blockchain applications are the increased efficiency and higher security we can enjoy.
“We have already seen this in the first use cases such as securities lending, where we have done away with having to move securities around physically. The higher the number of participants on the blockchain, the more these advantages are felt.”
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