Redefining enterprise blockchain: Coreum adopts the ISO20022 standard on-chain

Modern financial systems grapple with the need for real-time processing and scalability while struggling with inconsistent data standards across institutions.

The financial markets have yet to see a layer-1 blockchain solution capable of addressing regulatory issues while delivering secure, swift, scalable and cost-effective transactions. Enterprise-grade networks can change the game by adhering to the ISO 20022 global standard.

Technological development has experienced an exponential evolution, transforming businesses of all sizes to the core. The advent of the internet in the 90s marked a turning point, changing corporate behavior and offering digital solutions implemented across all levels.

However, the financial sector, pivotal in this technological renaissance, continues to grapple with critical issues that hinder its evolution. One of the most pressing challenges is the need for real-time processing. In an era where global transactions are expected to happen instantaneously, traditional financial systems often fall short. For instance, international wire transfers can still take several days to process.

Scalability is another significant hurdle. As digital transactions increase exponentially, many existing financial infrastructures struggle to handle the surge in volume without compromising performance or security.

Moreover, inconsistent data standards across different financial systems create a fragmented landscape. Each institution often operates on its unique set of rules and protocols, making interoperability a daunting challenge. This lack of standardization leads to increased operational costs and complexity, especially in cross-border transactions that involve multiple financial systems with varying standards.

Blockchain technology, which many call the fourth industrial revolution, emerges as a beacon of hope to solve the finance sector’s longstanding challenges. The innovative technology stands out with its unique features, such as decentralization, security, and efficient and low-cost transactions. In 2023, a survey by CasperLabs found that 90% of businesses across the U.S., the UK and China were already using blockchain in some way or another.

Regular financial businesses want to implement blockchain because it can provide considerable savings in infrastructure, transactionality and administrative costs. Blockchain has the potential to enhance trust, resilience and accuracy within financial ecosystems and streamline the digital movement of financial assets, diminishing the need for central intermediaries in these transactions.

Challenges of blockchain adoption among enterprises and institutions

Despite its unique benefits, the adoption pace of blockchain is hindered by several challenges that still need to be addressed, including:

• Interoperability and data standardization: Blockchain is a fragmented market, with many different independent networks that don’t communicate with each other. Also, many public networks cannot be integrated with existing business infrastructures, requiring a new infrastructure that is difficult to adopt and often costly.
• Regulatory compliance: Some businesses, especially in the finance industry, are hesitant to adopt blockchain until they observe a well-established regulatory framework. Many jurisdictions, including the U.S., are still working toward achieving regulatory clarity.
• Speed: One of the critical challenges blockchain networks face is the limitation in processing speed. Slow transaction times can hinder the scalability of blockchain solutions, especially for enterprises that require high-speed transaction processing.
• Transaction costs and fees: High transaction fees are a significant barrier for many businesses considering blockchain adoption. These costs can become prohibitive, especially for operations requiring a high volume of transactions.
• Energy consumption: The energy-intensive nature of some blockchain networks, particularly those relying on proof-of-work (PoW) consensus mechanisms, raises environmental concerns. This high energy consumption conflicts with the growing emphasis on sustainability and carbon footprint reduction within the corporate sector.

Transcending borders with ISO20022

While it’s difficult to deny large public blockchains’ high level of decentralization and security, they often fall short in adjusting to specific business needs. Coreum is a layer-1 smart blockchain tailored to meet the scalability, security and interoperability needs of large enterprises.

The platform directly addresses the challenges of modern financial systems through its enterprise-oriented blockchain solutions, offering enterprise-grade blockchain (EGB) infrastructure for a diverse range of use cases such as tokenized securities, lending platforms, nonfungible token (NFT) marketplaces, decentralized exchanges and metaverse applications.

Coreum addresses the key challenges of blockchain by integrating the ISO 20022 global standard, an ISO standard for electronic data interchange between financial institutions. ISO 20022 offers a common platform and methodology for financial messaging, bringing interoperability to the financial sector.

The standard, which requires at least 1500 Transactions Per Second (TPS) capability, ensures clear, consistent communication across international borders by providing a universal language for financial messaging.

By aligning with this global standard, Coreum’s transactional frameworks transcend traditional limits, delivering speed and precision with adaptability for the ever-evolving landscape of financial technology applications. Coreum’s ISO20022 integration also ensures interoperability with traditional banking systems, enabling seamless integration and compliance.

Coreum is compliant with the ISO 20022 global standard. Source: Coreum

This adherence directly addresses the issues of real-time processing, scalability and data standardization that plague current financial infrastructures, effectively solving three major challenges hindering blockchain adoption among businesses.

Coreum recently launched an ISO 20022 simulator that allows businesses to test transactions in a controlled environment, offering a hands-on experience of Coreum’s benefits.

Coreum stands out from other blockchain solutions with its on-chain interoperability features and 7000 TPS capability complemented by a swift 1.5-second block time, ensuring rapid transaction processing. The blockchain operates with a 99% lower carbon footprint and supports WebAssembly (WASM) smart contracts, allowing for more complex and efficient contract functionalities. Coreum includes a noncustodial bridge to other blockchains, enabling a more integrated and versatile blockchain ecosystem and a full-featured decentralized exchange (DEX) module, rounding out its comprehensive blockchain solution.

Coreum compared to other blockchains. Source: Coreum

Coreum’s smart tokens are integrated with smart contracts, enabling the execution of functions autonomously without intermediaries. These tokens are designed with advanced programmability that allows for the automation of complex business logic and enhances the possibilities of financial messaging and transactional capabilities. Coreum’s smart tokens can be customized to power various financial products and services, from simple transfers to intricate financial instruments, each with unique features and governance rules.

Coreum employs a bonded proof-of-stake (BPoS) consensus mechanism, where participants bond or lock up their cryptocurrency as a stake, gaining the right to validate transactions, earn rewards and face penalties for malicious actions.

The blockchain adopts a variable inflation model, inversely proportional to the total value locked (TVL). Coreum supports fungible and nonfungible assets, offering customization options for tokenized assets, particularly in regulated financial markets like stocks and ETFs.

Promoting enterprise-grade blockchain standards

Coreum aims to be at the forefront of blockchain innovation by proposing a standard for the next generation of EGBs. Besides the compliance to the ISO 20022 standard, EGBs should have several important attributes, such as:

• Public database, smart contracts and immutability powered by cryptography.
• Real-time settlement capability with transaction details made public without exposing confidential details.
• A minimum capacity of 1,500 transactions per second.
• On-chain interoperability and cross-chain communication through bridge solutions.
• Anonymous transactions by default for decentralized finance (DeFi) and Web3 applications while being able to add the optional Know Your Customer (KYC) feature on-chain.
• Support for multiple types of tokens, including regulated security tokens.

By offering the optional KYC feature, EGBs can narrow the gap between the anonymity-oriented crypto market and the highly regulated financial industry. EGB networks can be employed for multiple use cases, including commercial banking, payments, supply chain management, trade, risk management and capital market solutions.

Enterprise-oriented blockchain solutions can improve business operations worldwide, especially in the financial sector. With the introduction of programmable tokens, automation powered by advanced smart contracts and regulatory compliance built-in at the infrastructure level, the next-generation decentralized networks are poised to thrive in the coming years, potentially experiencing a higher adoption level than traditional public chains among business entities. Coreum’s ISO 20022 simulator allows businesses and developers to explore and adapt these advancements.