Here's How Customers Bank Is Betting Big on B2B Blockchain
Blockchain has been indirectly making headlines for some time now. As the technology which underpins cryptocurrencies such as Bitcoin, Ethereum, and Doge, blockchain provides a method for secure peer-to-peer transactions to take place between parties without a centralizing authority playing a role. It should be noted that when we use the word "transaction" regarding blockchain, we aren't necessarily talking about an exchange of money, but any digital exchange between parties - be it data, money, or any other item.
Naturally, this means blockchain is finding its way into many different industries, from logistics to retail. However, it seems that blockchain is still most at home in finance, where it provides new ways for payments to be facilitated as per its original intention.
Blockchain
Before we get onto how Customers Bank is applying blockchain technology to its B2B offering, let's allow ourselves a short detour to describe how blockchain actually enables secure transactions to take place. It's still a widely misunderstood technology so, for the uninitiated...
Blockchain takes the form of a decentralized database (or ledger as it's known in the business) of transactions which is distributed to and simultaneously stored by all interested parties. Each new transaction in an interaction between parties creates a new block of information in an ongoing chain. These blocks are cryptographically secured with a long and complex hash code which contains information regarding the latest transactions and all the previous blocks in the chain.
These hash codes, combined with the fact there is no one location where the data is stored - and therefore no one location for a hacker to break into - are what grants blockchain its much-vaunted security, and allows peer-to-peer transactions to occur without the need for a centralized authority to verify and secure them.
Customers Bank
Eager to use blockchain technology to augment its own customer experience, Pennsylvania-based Customers Bank has announced a new and innovative partnership with banking blockchain disruptor Tassat.
Based in New York, Tassat was founded in 2017 with a mission to provide future-proof digital payments solutions to banks and make the power of blockchain technology available to more customers than ever before. Tasset's solution works by tokenizing US dollar deposits and storing them in a digital wallet which operates using a private and permission-based blockchain network. This means instant payments can always be available and made without the usual transaction limits, as well as making cross-border payments easier and in real-time.
'"By using the TassatPay platform, we have removed payment risk, clearing, settlement and confirmation delays for clients," said President and CEO of Customers Bank, Sam Sidhu. "While not every commercial client will adopt this service immediately, we believe this is the future of banking and puts Customers Bank at the forefront of the modern financial services industry. Customers Bank believes it will attract clients and significant deposits with the launch of the TassatPay platform."
Tokenization refers to the process of converting assets into digital tokens which can then be stored online and distributed. For example, let's say you want to use some of the value of an asset for an investment, but you don't want to sell the entire thing. By turning it into tokens, you can sell a proportion of that asset while retaining a majority ownership - verified by a blockchain ledger.
Cryptocurrencies are essentially products of tokenization.
"TassatPay enables the bank's clients to make real-time digital payments and works by tokenizing their US dollar deposits," said CEO of Tassat, Ron Totaro. "It also provides the infrastructure for executing smart contracts, processing transactions in multiple digital currencies and enhanced data capabilities. We're delighted that Customers Bank has given its clients access to the TassatPay platform. TassatPay gives them secure and reliable real-time settlement for any B2B transaction, around the clock, 365 days a year, with no size limitations, all on blockchain rails."
Since its relatively recent founding, Customers Bank has gained a reputation for rapid growth and a drive towards digital technology. Through a special acquisition deal with nonbank fintech brand BM Technologies, Customers Bank was introduced to high-tech and agile business practices - an ethos which it has enthusiastically embraced. With only 12 brick-and-mortar branches to its name, Customers Bank is relying on digital banking and innovative services such as with Tasset's blockchain solution to carve out its own niche in the financial landscape.
Final Thoughts
Blockchain is a technology which shows significant promise across many industries. However, as it was first introduced to the world as a method of carrying out financial transactions, it is encouraging to see it being deployed in the banking industry in such an effective manner.
You can hear Customers Bank's Chief Digital Officer, Dan Armstrong speak at Future Digital Finance 2022, taking place in March at the Hyatt Regency Miami, FL.
Download the agenda today for more information and insights.