Finteum

Overview

Finteum is creating a global financial market that enables banks and institutions to borrow and lend for minutes or hours at a time instead of overnight. Finteum has built a treasury funding order and trade management platform, using R3's Corda distributed ledger (DLT). We trialled it successfully with a group of 4 banks with £1.5trn combined balance sheet. Unlike most capital markets DLT applications that replicate existing transactions and markets, Finteum aims to use the power of DLT to build a new financial market.

Banks manage tens of billions of pounds of payments and settlements every day through central banks and nostros. Banks control the timing of outgoing payments but have limited control on incoming payments. To mitigate risk, banks are required to reserve balance sheet for intraday liquidity so they can continue to make payments in stress scenarios. Finteum estimates that a large bank could reduce liquidity buffers by borrowing in an active intraday market, lowering costs by £40m per year, or £2bn per year for the industry.

For intraday borrowing, process efficiency is important and using shared data (DLT) facilitates this. When banks trade bilaterally the trade data moves inefficiently on both sides through front, middle, and back office functions before reconciliation. Finteum uses R3’s Corda DLT platform so market participants have a secure, shared record of pre-trade orders. These orders are matched by our proprietary matching algorithm, and migrate to post-trade settlement and to the distributed trade repository. This avoids failed settlement, out-trades and reconciliation errors.