The UK Financial Conduct Authority (FCA), together with R3, RBS, and a major global bank, have developed a blockchain-based prototype application for regulatory reporting of mortgage transactions.

Built on R3’s Corda distributed ledger technology (DLT) platform, the application is able to generate automated delivery receipts for the regulator when a mortgage is booked.

“This project has shown that distributed ledger technology, and specifically the Corda platform, can give the regulator a new tool capable of overseeing mortgage activity much more quickly and efficiently than before whilst greatly reducing data inconsistencies. This also streamlines our business, enabling us to simplify our processes and deliver better experiences for our customers,” Richard Crook, Head of Emerging Technology at RBS, said.

Corda is a financial grade distributed ledger that records, executes, and manages institutions’ financial agreements in perfect synchrony, with point-to-point communication to ensure the privacy required by participants in wholesale financial markets. It allows the application to provide a single, immutable record of mortgage transactions and interpret regulator rules on a distributed ledger.

According to the official release, the application significantly reduces cost as well as operational and reputational risk. The solution could also be extended to other products and regulatory reports, as well as other areas of mortgage operations.

“We have engaged with hundreds of regulators across the world since the outset of R3. Our members are some of the most heavily regulated institutions in the world, and so streamlining and improving regulatory reporting has been a key consideration as we develop Corda. Bringing regulators and banks together in projects like this is the only way to develop effective, futureproof solutions that meet the needs of all parties involved,” David Rutter, CEO of R3, said.

R3 said that it will continue to work with project participants to move towards a live pilot of the application. They plan to engage with other UK mortgage lenders, the academic community, and other regulatory bodies to showcase the prototype and receive feedback for shaping a production-ready version.

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