Portuguese bank Banco Best and Credit Suisse Fund Services SA today completed a cross-border end-to-end investment fund transaction using a blockchain distributed ledger platform provided by FundsDLT.

The two companies sought to use blockchain technology in order to process the funds faster than traditional means.

This transaction was meant to show the capability of the new funding model intended to show that it could be more efficient, scalable and timely execution across the entire fund trade process. For this transfer, blockchain technology was used for every step of the fund life cycle from delivery of the order to closing the trade.

“This proof of concept is a great achievement,” said Carlos Almeida, director of investments at Banco Best. “We want to be involved in blockchain technology to work together with all stakeholders in order to adapt and seize new opportunities in our business model, with the ambition to improve the customer experience and to promote financial inclusion.“

The project used a dedicated app developed by Banco Best using its own application programming interface and blockchain infrastructure from FundsDLT, a Luxembourg-based decentralized ledger technology development company that specializes in investment funds distribution.

FundsDLT has built its infrastructure on the public Ethereum blockchain, the second-biggest globally after the blockchain that executes the cryptocurrency bitcoin. The system is designed to bridge between legacy networks and its own distributed network and allows clients to run their own nodes locally, in the cloud or using FundsDLT’s own servers.

Blockchain technology has been explored in past years as a way to better distribute and transfer funds across borders with greater efficiency and less cost. The technology has also been put to use increasing transparency for regulations such as know your customer, called KYC in the industry, and anti-money-laundering laws.

Credit Suisse piloted a blockchain program with ING Groep NV in March of last year that successfully transferred $30 million in funds for a securities lending transaction. This project with Banco Best represents a continuing trend for investment companies testing the technology.

“Blockchain technology in connection with potential mutual KYC servicing will be a game changer for the investment funds business,” said Claude Metz, head of shareholder services at Credit Suisse Fund Services. “This initiative benefits investors, distributors and transfer agents greatly from an operational efficiency standpoint, and we are only at the beginning of this most promising journey.”

Image: Credit Suisse