The FCA declined to comment directly on the pilot project but it is believed it is intended to explore ways of making the exchange of regulatory mortgage data easier, cheaper and more secure for firms.
The project arose from ongoing efforts by the regulator to collaborate with Fintech firms and harness technical innovation to benefit consumers and the finance industry.
The distributed ledger technology (DLT) system, built using R3’s Corda technology enables, the banks, one of which is Royal Bank of Scotland Group (RBS) to generate automated delivery receipts for the regulator each time a mortgage is booked.
Richard Crook, head of emerging technology at RBS, said: “This project has shown that distributed ledger technology, and specifically the Corda platform, can give the regulator a new tool capable of overseeing mortgage activity much more quickly and efficiently than before while greatly reducing data inconsistencies. This also streamlines our business, enabling us to simplify our processes and deliver better experiences for our customers.”
In this instance, Corda’s technology allows the application to provide a single, immutable record of mortgage transactions and interpret regulator rules on a distributed ledger, delivering the following benefits:
- Significant reduction in cost and potential to rationalise people, processes and systems;
- Reduction in operational and reputational risk by solving data quality issues at source and increasing data consistency;
- Potential to extend the solution to other products and regulatory reports, as well as other areas of mortgage operations.
Project participants will continue working with R3 to move towards a live pilot of the application. This will involve engaging with other UK mortgage lenders, the academic community and other regulatory bodies to showcase the prototype and receive feedback for shaping a production-ready version.
R3 leads a consortium of about 80 financial institutions aimed at building a distributed ledger based technology for the finance industry.
David Rutter, CEO of R3, said: “We have engaged with hundreds of regulators across the world since the outset of R3. Our members are some of the most heavily regulated institutions in the world, and so streamlining and improving regulatory reporting has been a key consideration as we develop Corda.
“Bringing regulators and banks together in projects like this is the only way to develop effective, futureproof solutions that meet the needs of all parties involved.”