Dutch bank ABN AMRO has announced a new blockchain-based alternative to managing funds using escrow accounts.
Non-bank organizations, such as brokers, exchanges, pension funds, notaries, and product service providers, have to use escrow accounts to manage client funds. By eliminating escrow account management costs, the blockchain solution would help reduce administrative costs for these organizations.
“With this new service, every individual client of the non-bank organisation gets a bank account with the ABN AMRO Clearing Bank (AACB) via the blockchain. That way, fund flows between the organisation and its clients are included in payment processes under regular supervision, guaranteeing the required transparency,” ABN AMRO explained.
The solution has been developed in consultation with Nxchange – a next-generation, white-label stock exchange where companies and financial institutions issue and trade equity and bonds. Using the platform, these companies and institutions can collect capital directly from their own websites, offering investors a regulated equity and bond trading environment.
“Nxchange is the ideal party to be starting this innovation with. They're innovators themselves; their business model is geared toward efficiency and transparency. The next step is to jointly check and assess the new functionality and to make improvements where necessary. After that, the service can be made more widely available. We're seeing a great deal of market interest for this service,” AACB's Jan Bart de Boer said.
Fintech Nxchange is the first client to launch this solution, starting in February.
