Africa's largest banks and South Africa’s Central Securities Depository, Strate, set up a Blockchain network that could have a far-reaching effect on the continent’s financial sector.

South African Reserve Bank (SARB) and the Financial Services Board will play a role of observers.

While the new working group has representatives from Standard Bank, Absa, FirstRand, Nedbank - the top four banks in Africa - and Investec which stands at the eighth position, the participation of the Reserve Bank is the most significant because the South African apex bank has been a little skeptical about Blockchain, and Bitcoin, in the past.

Though still in an early stage, the confidence level that seems to have been boosted to get the banks and regulators on board points to the intermediary role of Strate, which provides electronic settlement of equities and bonds transactions concluded on the Johannesburg Stock Exchange.  

Strate recently held a Blockchain summit that brought about speakers from the Bitcoin, Ethereum and Fintech communities. It signed a Letter of Intent to collaborate on initiatives using Blockchain - or Distributed Ledger Technology - with Russia’s National Settlement Depository which was one of the first financial organizations in the world that announced the development of a Blockchain-based prototype of e-proxy voting.

The move is to forge a partnership between the two CSDs to develop solutions utilizing Blockchain with the first use case focused on proxy voting. They both believe that CSDs will be better positioned to face the changes presented by Blockchain technology and develop innovative solutions for the benefit of the financial market through an industry-wide collaboration.

Strate also achieved a milestone as it successfully processed the largest corporate action in its 18-year history - the electronic entries which enabled the conclusion of the acquisition of SABMiller by Belgian-Brazilian group, Anheuser-Busch InBev which enabled shareholders to receive in excess of R116-bln (about 8.1 bln) in cash entitlements, executed through the South African Reserve Bank.

The working group has established a private Blockchain among its members, and has exchanged assets using a distributed ledger. They see the widespread adoption of Blockchain as an inevitable progression and one that would require them to adjust their business models.

South Africa is Africa’s reinstalled largest economy. It is also the largest with the highest number of Blockchain as well as Bitcoin-related transactions as at present. There is a general belief that a spread in the adoption of the technology in South Africa will facilitate its use in other parts of Africa through the banks as well as other financial services.