Brazilian banks come up with blockchain prototype

A working group of the federation of Brazilian banks, Febraban, has developed a blockchain prototype based on the Hyperledger Fabric platform, one of the first initiatives of its kind in Latin America.

The prototype was demoed Wednesday at tech banking event Ciab Febraban, taking place in São Paulo.

The project consists of a blockchain platform to securely share information about mobile devices used by clients in their interaction with banks.

With this information, banks can enrich their anti-fraud systems to determine if a particular device is unreliable by having been, for example, lost or stolen.

"So when a client uses the bank's app to transfer money, for example, information about the device [not details about the transaction], are added to the blockchain system, verified and made securely available to the other banks with access to the platform," said Adilson da Conceição, coordinator of Febraban's blockchain taskforce.

"This way every link in the chain can know that that device is legal and secure. But that's just one possible use for the system,"

According to Conceição, the prototype development started effectively in February and was concluded at the end of May. Around 30 experts participated in the work.

Febraban's working group was created two years ago, in August 2016, initially with 15 financial institutions.

The group now comprises 18 financial institutions, including Brazil's largest banks (Banco do Brasil, Itaú Unibanco, Bradesco and Santander), the central bank and the Brazilian association of financial and capital market institutions, Anbima.

Last year, the group developed two proofs of concept through the Fingerprint and DNA projects, built over the two platforms then being tested: the Corda platform developed by the R3 consortium, using Microsoft's Azure; and Hyperledger Fabric, developed by an open-source global collaborative effort hosted by The Linux Foundation.

After the two proofs of concept, the group opted for Hyperledger Fabric.

"We tested 25 requirements, then brought them down to four: high availability (24x7), privacy, performance. Both platforms duly met all requirements. Technically the two are very good. But the business model was the differential," said Conceição.

Despite that, he said that there is not a single dominant platform being embraced by financial institutions.

Each bank involved in the initiative is now discussing potential business cases and when and how to implement the solution created. There is no defined timetable for implementation or an obligation to deploy it, but the expectations are that banks define that throughout this year.