Are safe high-value cross-border payments possible?
Is it possible to make safe high value cross-border payments? This is the question posed by consultants Accenture who back ed an experiment on how this new frontier for payments could be made using distributed ledger technology (DLT).
Accenture and JP Morgan supported The Jasper-Ubin technical project which looked at different possible models of connectivity between the two DLT networks - Quorum and Corda – for the clearing and settlement of payments and securities using blockchain.
The result: Monetary Authority of Singapore (MAS) successfully transferred Singapore dollars issued on a Singaporean Quorum network to Bank of Canada (BoC) on a Canadian Corda network. BoC received the same amount converted to Canadian dollars.
A cross-border payment transaction is when the sender and end receiver do not have access to the same ledger so transactions between them take place through a series of linked transfers on different ledgers.
“The collaboration between the two central banks has successfully proven the ability for settlement of tokenised digital currencies across different blockchain platforms,” says the report.
“In combination with earlier work on Delivery versus Payment (DvP) settlement, we are forging a path forward for blockchain platform interoperability in a future world of heterogeneous distributed ledger platforms.”
This pioneering work, documented in the report Jasper-Ubin Design Paper: Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies, reveals the possibility to process international payments without relying on a trusted intermediary.
“It also establishes that payments can jump across different DLT platforms. In which case, DLTs could herald a bold new future for a safer and easier way to send money compared conventional payment methods,” comments Accenture.
“DLT could offer an easier and faster path towards adoption than a centralised approach because it can leave the different jurisdictions involved in control of their portion of the network while allowing for tight integration with the rest of the network.”
What powered the success of Jasper-Ubin experiment?
According to Accenture the experiment by Jasper-Ubin used Hashed Time-Locked Contract (HTLC), a cryptographic technique, to move assets across different networks in an all-at-once or not-at-all way.
“This means the payment is returned to the sender if the receiver fails to acknowledge the receipt of payment before a deadline.
“For this reason, HTLC can be a mechanism for facilitating real-time transactions and simplifying the complex payment processes. It demonstrates how two parties could set up contracts without the need for a third-party intermediary,” says Accenture.
The report points out that the Jasper-Ubin project is experimental in nature, and whether we will eventually use blockchain technology for high value cross-border payments remains to be seen.
“Technology exploration and experimentation will continue because we see potential in this technology. More importantly, cross-jurisdictional collaborations must continue, as the development of common shared understanding will benefit the global ecosystem regardless of the technology that we eventually choose to use.
“We encourage central banks, regulators, financial institutions and technology companies to read about the achievements and learnings from the Jasper-Ubin project and join our efforts in making cross-border payments cheaper, faster, and safer,” concludes the report.
UK office space slashed as hybrid working looks set to stay
With hybrid predicted to be the working model of the future, and businesses both large and small announcing that WFH will continue for employees into the future, the traditional office space is being re-thought.
Businesses are both questioning how much space they need for a hybrid working future, especially if it means they can potentially save money, and what form that space should take.
UK firms slashing office space
Back as early as February, HSBC – whose real estate footprint currently stretches to around 112 football pitches worldwide – said it would be cutting its post-COVID office space by half globally and by 40% in London over the next few years, as it looks to implementation of a hybrid working model in light of the pandemic.
Lloyds Bank followed suit. Following an internal survey where 77% of employees said they wanted to continue to work for 3+ days a week post-pandemic, the bank announced it was also moving to a hybrid model, and so looking to cut its office space by 20% over the next two years.
In fact, the latest research from consulting firm PwC reveals that a third of organisations surveyed (258 of the UK’s largest companies) believe they will reduce their office footprint by more than 30%.
The findings of PwC’s Occupier Survey indicate there is likely to be a sizeable fall in occupied office space with half of executives surveyed saying that despite taking into account mass vaccinations, employees will continue to work virtually 2-3 days a week.
And companies continue to announce the hybrid working model for their employees. Accountancy firm EY has just announced that its 17,000 employees are moving to a hybrid way of working, WFH for at least two days a week. This follows PwC which in March said workers could stay at home for half the time and KPMG which this month said it would expect employees to only work two days in the office every week.
More collaborative work spaces
However, what’s also clear from PwC’s research is that the role of the office is not going to disappear completely, but instead adapt to a new way of working, with half of all organisations with more than 100 employees saying they have a real estate and workplace strategy that considers the long-term impact of COVID-19.
“We may see an increased demand for flexible space as many businesses operating models may well need that option if holding dead space is to be avoided,” says Angus Johnson, UK Real Estate Leader at PwC UK.
According to the survey, more than three quarters of respondents said they are likely to reconfigure existing office with 43% of financial services firms stating that they are extremely likely to do so as a result of the pandemic.
“It’s also clear that the nature and purpose of office space is going to change. As occupiers seek new, different space to meet their accommodation needs, environmental aspects will be increasingly important. If the real estate sector is to truly succeed as a more dynamic, greener industry it’s imperative that creative thinking comes to the fore.”
And companies are already thinking creatively how they can utilise office space in a hybrid future. So while HSBC is cutting a significant amount of office space, it is not downsizing its prestigious Canary Wharf headquarters, and instead reimagining the space. In April, CEO Noel Quinn announced the firm was embracing an open plan floor, with no designated desks or private offices, and instead using hot-desks in line with the future hybrid working style. “My leadership team and I have moved to a fully open-plan floor of the building in east London with no designated desks,” he said on LinkedIn.
Lloyds also reported it was adapting its office space, so that rather than individual offices, it will have a more collaborative workspace. And just last month, KPMG announced it too was ditching desks and individual offices, and replacing them with meeting rooms and conference halls for a more collaborative workspace.