NEW YORK (Reuters) - Fidelity Investments Inc has become the first financial institution to join the Initiative for CryptoCurrencies & Contracts, a group of academic institutions and technology companies looking to develop blockchain-based technology.
Fidelity Labs, the innovation arm of asset manager Fidelity, will be a member of IC3 along with Cornell University, University of California at Berkeley, University of Illinois at Urbana–Champaign, the Technion, IBM Corp and Intel Corp, the company said in a statement.
The Boston-based fund manager will collaborate with the group to develop blockchain programs to help make financial systems more efficient and secure.
Blockchain, which first emerged as the system underpinning cryptocurrency bitcoin, is a distributed record of transactions that is maintained by a network of computers, rather than a centralized authority.
Over the past two years, financial institutions have been ramping up their investments in the technology in the hopes that it can help the make some of its processes simpler and cheaper. Potential use cases range from systems to manage international payments, to programs to settle securities trades.
In a bid to accelerate development and adoption of blockchain, companies have been joining forces in several industry consortia and groups.
Banks have been more vocal about their efforts than asset managers, with most large lenders having joined a group led by New York-based startup R3. Most recently a group of 30 companies, including several banks, launched a new blockchain consortium called the Enterprise Ethereum Alliance.
"What IC3 brings is that academic computer science legacy that can help us explore how this technology can be applied," said Hadley Stern, senior vice president at Fidelity Labs, explaining why the asset manager had chosen the group.
Use cases the asset manager is interested include the settlement of repurchase agreements transactions, Stern said.
Despite the excitement around blockchain, the technology is still in its early days and proponents warn that it may take years before financial institutions can fully reap its benefits.
IC3, which is based at the Jacobs Technion-Cornell Institute at Cornell Tech in New York City, conducts research aimed at developing blockchain that meets the standards needed to be deployed by businesses.
"Expected outcomes of our work include new blockchain and smart contract technologies that are secure, incrementally deployable, and efficient to meet the industry's needs," said Emin Gün Sirer, co-director of IC3 and a professor at Cornell University in Ithaca, New York
Reporting by Anna Irrera; Editing by Lisa Shumaker