IBM is launching a blockchain app store to help banks and financial institutions save big on back-end costs.
The trendy technology is known for powering cryptocurrencies, but IBM hopes it can help financial services companies use it to cut down on operating expenses and fees.
Blockchain serves as a digital ledger or record of financial transactions. Past entries can’t be changed and new ones are added in real time. Because the information is shared by multiple entities, it’s difficult for others to change or manipulate the data, making it incredibly secure.
IBM’s new app store, LedgerConnect, gives financial companies access to seven vetted blockchain vendors, which will help them streamline their trading processes and back-end operations by establishing one set of records. Right now, most banks operate their own individual systems, which is really expensive.
The company said banks, including Barclays and Citi, are already taking part in the program.
While some blockchain networks are public, like bitcoin, IBM is working with financial firm CLS, which settles transactions in foreign currencies, to keep it private.
Related: These startups are trying to save local news
According to Keith Bear, IBM’s vice president of global financial markets, this approach was crucial to the process because a private network ensures sensitive banking transactions are protected.
The blockchain app store may help banks solve a very expensive problem.
According to a 2016 Goldman Sachs report, up to 10% of trades are subject to mistakes that cause costly delays. The report states blockchain technology could save financial institutions around the world between $11 and $12 billion annually by reducing the number of mistakes that result in fees and higher operating costs.
IBM’s Bear calls the app store “a starting point.” The company said new institutions and blockchain technologies will be added soon.