A consortium of dozens of American credit unions are preparing to roll out a new blockchain initiative, ahead of its first public demonstration.
Scheduled to be demoed next week, the project, known as CULedger, has the support of over 50 credit unions, including the four largest organizations in this sector in the U.S.
The project is being led by Credit Union National Association and Mountain West Credit Union Association, who are pioneering the consortium effort to develop and launch the new blockchain protocol.
Specifically, the technology is designed to give credit unions more sophisticated infrastructure for money and information exchange, using the distributed ledger. It is hoped that if successful, CULedger could become an industry standard, adopted across the board by credit unions looking to improve their competitiveness and efficiency in operations.
The live demonstration will focus on the identity elements of the system, essential for ensuring credit unions can adhere to compliance regulations and controlling fraud risk.
The concept behind the technology has already been demonstrated by Rick Cranston of Mountain West, in a presentation on innovation and development held in April.
According to Cranston, one of the system’s major achievements is its ability to respond to smart contracts, which he feels could be one of the more significant cost savings afforded to credit unions running the system in future.
“Smart contracts will do several very important things for the credit union industry but there is one very big thing it will do. Smart contracts will save credit unions lots and lots of money.”
Smart contracts are one element of the blockchain considered to have potentially industry-defining effects, allowing partners on the blockchain to dynamically create and alter agreements by need.
In all, the CULedger utility aims to overhaul credit union back-end systems, as part of its bid to digitize the industry and embrace the power of the blockchain.
In doing so, credit unions become the latest subset of the financial services industry to recognize the potential of blockchain technology in their market.
The public demonstration is scheduled to be held in Tucson, Arizona on May 9, and looks set to be closely monitored by credit unions and industry commentators alike.