After years of promises, Brazil banks unveil first blockchain product

Brazilian banking association Febraban, in partnership with inter-banking payments chamber CIP, has launched the so-called national financial system blockchain network (RBSFN), the first of its kind.

The platform, announced at this year’s Ciab Febraban banking technology conference in São Paulo, comes after years of testing and discussion.

The first working group to discuss blockchain in Brazil dates back to July 2016. Proofs of concept began in 2017, but since then few practical advances have taken place.

At last year’s Ciab, Febraban announced and demoed a blockchain prototype and promised the first use cases would come in the following months.

The system now officially presented built on the project announced last year: it is a blockchain network based on IBM’s Hyperledger Fabric open code platform for banks to securely share information about mobile devices used by clients in their interaction with the banks.

With this information, financial institutions can enrich their anti-fraud systems and determine whether a particular device is unreliable by having been lost or stolen for example.

"If someone tries to use this phone to access any bank's app to transfer money, for example, all banks in the blockchain will know."

Of the 18 financial institutions announced last year as being enrolled in of the RBSFN "Device ID", only nine are taking part in the launch, including Brazil's largest banks: Banco do Brasil, Itaú Unibanco, Bradesco, Santander, Caixa, Banrisul, JP Morgan, Original and Sicoob.

According to Joaquim Kavakama, general manager at CIP, the banks not included in the launch did not get endorsements from their legal departments to take part in the rollout.

"The prototype was refined and validated last year. The project is complex and needed to be structured safely, but we were successful. We're now starting up the first use case. Several others are possible," Kavakama said in response to a question from BNamericas.

The governance of the system will be self-regulated by Febraban and CIP.

The group will now test the rollout of the RBSFN "device ID" with the Corda platform developed by the R3 consortium.

Participating banks are talking to the telecom sector and the number portability company in Brazil, ABTelecom, to refine information sharing. One of the possibilities being mulled is for operators to join as a "node" in the system, Kavakama said.

"We will not identify the individual, only the appliance. This is already allowed today,” added Leandro Vilain, director of business policy and operations at Febraban.

The cost is free for banks in the first year, with CIP footing the bill. For CIP it is a win-win opportunity, as it is able to scale and to take advantage of the platform in different applications.