Finally the much awaited listing of ID8 at 11am Wednesday morning. With a 11 mill IPO that went heavily to funds and instos the register is super tight with top 20 holding 84% and top 40 holding 92% with some big big names invested here with the likes of Mike Tilley and Matthew Grounds backing this listing. With a market cap of only 41 mill at IPO price of 75c there is significant upside potential here as 1 of the 1st blockchain comapnies to be live in a global bank (HSBC) being used to manage compliance. As the banking sector looks to manage their transactions with more info amd compliance with transactions ID8 offers a blockchain solution that has global potential to grow quickly and add significant banking clients with Westpac and Macquarie also piloting its use. Great read below from the AFR.
“HSBC is using the technology to attach more data to some payment instructions sent over the global Swift network. It is understood this is the first deployment of a live blockchain in a global bank to manage compliance.”
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Identitii hits ASX as banks look to blockchain to monitor payments
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by
James Eyers
Identitii, whose blockchain software is currently being used by HSBC to improve cross-border payment compliance, will list on the Australian Securities Exchange on Wednesday morning.
Identitii, which raised $11 million in an initial public offering and is expected to hit the boards at 11am (AEDT) with an indicative market capitalisation of $41 million, has 30 staff in Sydney and its seed investors include
UBS investment banking heavyweight Matthew Grounds and Latitude Financial chairman Mike Tilley.
HSBC is using the technology to attach more data to some payment instructions sent over the global Swift network. It is understood this is the first deployment of a live blockchain in a global bank to manage compliance.
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The Swift network exchanges about 30 million messages each day. Swift is
hosting its annual global conference, Sibos, in Sydney next week.
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Identitii's blockchain could be used to transfer data and documents on any network, including the "new payments platform" (NPP) infrastructure, which was also built by Swift, in collaboration with the major Australian banks and Reserve Bank of Australia.
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ASX Announcements Expand
KTM Capital and Canaccord Genuity are joint lead managers of the float, which
was first revealed in Street Talk.
The deal has been delayed for about a month, as the ASX took longer than anticipated to conduct checks on the company's "shareholder spread", or the number of shareholders not affiliated with the company.
Identitii will join other ASX-listed blockchain players, including DigitalX and Ookami. ASX itself is also developing blockchain technology to settle and clear the entire equities market.
Institutional investors in Identitii include Paradice Investment Management, Terra Capital, KIS Capital, and The Lind Partners from New York.
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"Identitii has proven real world use for blockchain technology and is solving an incredibly difficult problem for the global banking system," said the chief investment officer from KIS Capital, Josh Best.
Swift limitations
The Swift network essentially manages payment settlement instructions sent between banks, but the amount of data that can be attached to messages is limited. This has become a growing problem for banks, which need to explain the purpose of payments more comprehensively to meet stricter anti-money laundering regulations.
HSBC, which has been embroiled in a money laundering scandal for much of this decade, is using Identitii's Overlay+ application to monitor internet banking of clients in India who do many international money transfers.
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This is allowing it to cut back on manual processing by internal teams, mostly emailing the "purpose of payment" alongside the Swift payments moving between global HSBC subsidiaries.
It's understood Standard Chartered is considering adopting the Identitii system; it has already trialled it along with JP Morgan, Rabobank and Barclays.
Two Australian banks – Westpac Banking Corp and Macquarie – have also piloted Identitii technology. It's understood Westpac is exploring how the system can be used to improve monitoring of correspondent banking relationships.
Identitii is earning some revenue from the HSBC contract but it is at the early stage and the prospectus contained no financial forecasts or guidance.
Local banks are exploring
regtech solutions to enhance compliance in the wake of the Commonwealth Bank's money laundering scandal.
Blockchain technology is useful because it creates an auditable, historical record of the message and time stamps it.
"We can provide an overlay to legacy systems, which can be less dramatic and costly than ripping up and replacing old systems. It could be useful to anyone doing cross-border exporting or moving a large amount of material," says Identitii's co-founder and CEO, Nick Armstrong.
"This isn't some forward-looking proof of concept. This is a use case for blockchain that is here today and in production – the use case is information sharing. Information sharing can be separate from settlement."
Big savings
Enhancing the quality of information over Swift could save banks more than $100 million per day.
Identitii reckons about 8 per cent of international payments are held up due to missing or incomplete information as risk-averse banks are doing more checks. It costs around $US50 each time a payment is stopped to check it and get it moving again. So that amounts to $US120 million every day across the global network, given its 30 million daily transactions.
Banks typically pass most of that cost on to all customers conducting international transfers over Swift: the cost of error processing means the typical transaction cost for any transfer is around $US30, even though Swift charges a bank only cents.
The quantum of such cost savings means Identitii is facing growing competition. For example, JP Morgan has created a similar blockchain, called the Interbank Information Network, which is being tested by
more than 75 global banks, including ANZ Banking Group.
The use of blockchain to enhance both regulatory compliance and cross-border payments will be explored at the big Sibos event next week in Sydney, at which Mr Armstrong will appear on a panel. Identitii was identified by Swift's innovation division, Innotribe, in 2016.
There is a big opportunity for Identitii to be a significant blockchain provider in the ASEAN region, Mr Armstrong said, by helping to govern un-harmonised regulation. It could also help to power "open banking" by managing complexity around permissioning. Regulations such as GDPR in Europe should also be a driver of demand for the software, Mr Armstrong said.
It was a tough decision to keep Identitii in Australia as it strove for scale over the past few years. But Mr Armstrong said a small government commercialisation grant of just $1 million allowed it to get through the funding "Valley of Death".
The ASX also provided a forum for funding to be raised quickly, not withstanding the escrow check delays over the past month. Identitii's previous, private funding rounds each took eight months; this IPO has been concluded in five.
