EXCLUSIVE—The legacy infrastructure of most banks leaves something to be desired, and payments technology provider Baton Systems wants to use the cloud, APIs, and distributed ledger technology to help.
The company, which just won the Bank Innovation 2018 DEMOvation challenge, has partnered with financial technologies provider Oracle, a move that will allow its technology to be integrated into a bank quickly and easily, Arjun Jayaram, CEO and founder for Baton, told Bank Innovation.
“For a company like Baton to go to a large bank and say, we know everything about technology, it will take some time to establish a relationship,” Jayaram said of the partnership. “Oracle already has the relationship with these banks.”
The partnership, announced earlier this week, will list Baton’s software on Oracle’s Cloud Marketplace, as well as its Digital Platform for Open Banking, according to the release, which will allow banks to more easily integrate Baton’s payment software. Oracle’s cloud model is “very unique,” said Jayaram, as it allows banks to have physical hardware that can be managed remotely.
Its open banking platform allows banks and fintechs to work within an open API framework, allowing smaller banks the opportunity to collaborate on financial innovation and, essentially, pick and choose the services they are able to implement.
Two year-old Baton hopes that its partnership with Oracle will enable future bank partnerships, Jayaram told Bank Innovation. Banks, which are making (slow) progress with innovation, are still hampered by their legacy systems, a factor Baton hopes to circumvent with its payment solutions.
“Ripping out banking infrastructure is expensive and very risky, that’s not going to happen for a long time,” Jayaram said.
The company’s solution uses distributed ledger technology, among other technologies, to drastically cut the time to takes the send money from bank to bank (from two to three days to about three minutes, Jayaram said). It is currently working with three financial institutions, including Citibank and the CME Group. Baton could not yet name the third institution.
The company is also hoping to work with Oracle to improve “the scalability of the blockchain,” Jayaram told Bank Innovation, as Baton currently runs on its own version of distributed ledger technology.
“We found that [the bitcoin] blockchain can’t scale up to capital market needs—it needs to handle about one billion transactions a day,” Jayaram said. With Oracle, the company is going to be further experimenting with its blockchain, focusing on “how we can make this faster,” and less about the blockchain itself, Jayaram said.
Right now, the bitcoin blockchain processes between seven and ten transactions a second, while Baton’s systems can handle about 83,000 a second, Jayaram said.1 - Reader Likes This Post