As small business and corporate customers increasingly ask for real-time payments, for certainty of settlement and efficient use of their working capital, Sam Sidhu wants to meet that need.
“We want to be at the forefront of that innovation, being a bank that’s big enough to accept large corporate customers and take on the customer service, yet small enough to have the agility to do this,” said Sidhu, who is CEO of Customers Bancorp in West Reading, Pennsylvania.
Over the past weekend, the $20 billion-asset Customers and two other banks, Orlando-based Cogent Bank ($1 billion of assets) and Western Alliance Bank in Phoenix ($66 billion of assets), started using an interbank network and a distributed ledger to conduct transactions among one another.
They sent and received $500 million in transactions over the Digital Interbank Network on Saturday. There were about 400 transactions with an average value of $1.25 million.
“This is a way to be able to do not just instant transfer, but also instant settlement, meaning the money is truly in the account instantly as well as instant data transfer,” Sidhu said. “That reduces a tremendous amount of complexity on the receiver’s end and creates certainty and confirmation on the sender’s end. So it’s exponentially more beneficial. If you had no technology limitations, this is how banks would’ve designed ACH in the ’70s, when they moved from paper checks.”
These transactions would normally be done using FedWire or ACH. Instead, they were conducted using a private, permissioned ledger developed by Tassat Group. The blockchain that Tassat developed is a privately permissioned fork of the Ethereum blockchain using ERC 20 smart contracts. Each bank has its own instance of the blockchain. The…
