Kevin Greene, Chairman and CEO of Tassat Group Inc. | June 21, 2022
Blockchain technology is just beginning to drive a sweeping transformation of the financial services sector. This technology will also lead to vast improvements in how banks serve businesses and how businesses transact with one another. Because the transformation is being driven by more efficient and more effective technology, banks have an opportunity to completely transform and enhance how they serve businesses, generating enhanced profitability for both businesses and banks.
The developers of blockchain understood that there would be many different types of applications for this breakthrough technology, which is why they designed options for both open, public chains and private permissioned versions which provide the controls needed for environments with higher levels of regulatory compliance. Tassat firmly believes that private, permissioned blockchain implementations are the solution for building the next generation B2B payments rails American banks and businesses need to compete in a modern global economy.
Private permissioned blockchains allow banks a safe path to innovation and are compatible with existing regulatory frameworks by:
- Enforcing known identities for all participants and supporting Know-Your-Customer (KYC) and Anti-Money Laundering (AML) requirements
- Providing strong controls over the confidentiality and visibility of information resident on the blockchain, supporting privacy requirements and keeping banks’ data within their corporate perimeters
- Limiting the deployment of on-chain applications, such as smart contracts, to authorized actors
Using a private permissioned blockchain implementation allows the layering of the types of governance, processes, and protocols needed to support B2B payments, such as the reversal of errant or fraudulent transactions or provision of data to regulatory or law enforcement authorities. A properly secured blockchain environment offers new, more efficient and cost-effective ways to meet these obligations.
The use of private permissioned blockchains also avoids variable transaction (“gas”) fees and the ESG concerns around energy intensive “mining” operations required by “proof of work” transaction validation, replacing them with energy efficient “proof of authority” consensus protocols. In addition to reducing carbon footprints, “proof of authority” provides protections against potential attacks on chain integrity, and increases the scalability, speed and efficiency of transactions.
Open, public blockchains have been sources of technical and financial innovation, but they are simply not suited to the needs of B2B payment solutions operating in highly regulated environments. They currently operate in a regulatory grey zone which makes it hard to distinguish innovative new solutions from those which are badly designed or even fraudulent.
The good news is that the private permissioned model allows banks to apply all the positive aspects of blockchain technology to their already established communities of trust, while avoiding the governance issues which have plagued attempts to build financial networks in a trustless environment.
Private permissioned blockchain is the future of B2B payments and Tassat is leading the way.
About Tassat Group Inc.
Tassat Group Inc. is a NY-based technology company that is the leading provider of private permissioned blockchain-based solutions for commercial banks including TassatPay, which enables banks to provide their customers with instantaneous, secure, real-time payments 24/7/365. TassatPay has become the most trusted blockchain-based platform for the banking industry and its B2B customers with nearly $500 billion in secure, real-time transactions to date. Tassat has added Smart Contracts and Fedwire functionality to make TassatPay a one-stop-shop for B2B Payments. In 2021, Tassat won a Google Cloud Customer Award for Innovation in Financial Services For more information, visit us at www.tassat.com on Twitter or on LinkedIn.