ABN AMRO Clearing Bank announced that it has developed a block chain technology based alternative to escrow accounts. The bank developed the alternative in consultation with Nxchange, a next-generation, white-label stock exchange.
Non-banking financial institutions who are entrusted with client funds generally use escrow accounts to manage those funds. With a block chain platform replacing the conventional escrow account, every customer of a non-banking financial institution will get a bank account from the ABN AMRO Clearing Bank (AACB). By doing so, fund flows between the organization and its clients are included in payment processes under regular supervision, guaranteeing the required transparency. The process considerably reduces administrative costs for the organization as escrow account management costs are eliminated.
Obviously, Fintech Nxchange will be the first client to launch the solution this month. Nxchange platform facilitates issuing and trading equities and bonds. Using Nxchange platform, companies and institutions can collect capital directly from their own websites, offering investors a regulated equity and bond trading environment.
Nxchange CEO Marleen Evertsz said,
“We can’t wait to get started on this cooperation. The solution simplifies the way investors can invest in businesses and other issuers. Block chain technology also offers a wider future perspective to facilitate transactions in multiple asset categories in distributed networks.”
Organizations that manage client funds will be the potential client for ABN AMO’s block chain based alternative platform for escrow accounts. This includes brokers, exchanges, pension funds, notaries, and product service providers. Clients’ transfer money to these organizations to be used for investments or payments. Since these organizations do not have a banking licencse, they have been forced to use escrow accounts. With the launch of block chain based alternative, these organizations can offer their clients individual accounts with AACB through the block chain.
Commenting on the launch, AACB’s Jan Bart de Boer, stated
“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.”