Blockchain Startup Raises Funds From Bank: What Does This Mean for Blockchain Adoption?

Fluent, a blockchain-based financial operating network and payment platform built for large companies and their global supply chains, recently announced $875,000 in seed round funding led by Tim Draper, of Draper Associates and other notable investors like Thomson Reuters, 500 Startups, SixThirty, KSTC, Capital Innovators, Boost VC and UMB Financial Corporation. Fluent will use the funds to support infrastructure, to hire additional enterprise software and blockchain specialists and will continue to build partnerships with global enterprises and financial institutions.

With the injection of fresh funds, Fluent joins an exclusive group of blockchain technology companies that have received investment from a financial institution. One of the investors, UMB Bank with over $40 billion in assets under management, seeks to extend its expertise in the space by investing in Fluent. This investment is part of the bank’s progressive strategy to achieve higher operational efficiency and a great example of a financial institution engaging with FinTech to adopt innovation.

As described by the company, Fluent’s platform transforms traditional money into a global, real-time, secure, frictionless and programmable medium. The company is building a suite of solutions on top of their blockchain-based system to help reduce friction, provide transparency and enhance collaboration across global supply chains.

In February, Fluent joined Capital Innovators’ and Boost VC’s accelerator programs, which allowed the company to expand to three locations and double the size of its team. Moreover, Fluent has entered the SixThirty FinTech accelerator as part of their Fall 2015 cohort. Fluent, along with three other teams this fall, will join an exclusive list of 18 companies who have gone through SixThirty since 2013.

Co-Founder and Director of Marketing at Fluent, Casey Lawlor, commented on the company's activities and partnerships: We are working with Thomson Reuters to consult on blockchain technology and working with an undisclosed financial institution to set up a proof-of-concept that after completion, will lead to the Fluent platform going live. We are currently in talks with large enterprises to join the Fluent network at the completion of our bank’s proof-of-concept. The development team has finished the core blockchain international payment platform that is the backbone of the Fluent network.

How Fluent accelerates innovation adoption by financial institutions

Blockchain has a recent but very hot and controversial history. It quickly became the most-discussed and promising technology in financial services space. In a relatively short time, the feelings around blockchain have been changing from confusion and caution to curiosity and experimentation.

Sharing his insights on the future of blockchain adoption with the LTP team, Casey said, Currently, financial institutions have realized the great potential of blockchain technology in streamlining global financial flows. All of the world's largest banks have research teams, developments teams, or have invested in blockchain technology or blockchain startups. They are creating use cases and proofs-of-concept for the technology, but we have yet to see a successful application or significant adoption of blockchain technologies in established financial institutions to reach consumers or businesses. Still, the potential is tremendous to eliminate friction for any type of secure digital asset transference between two individuals or organizations. It has stopped being a question of ‘if,’ it is a question of ‘when.’

The essential value of blockchain for financial institutions is the opportunity to cut the transfer fees and many third parties from financial transactions, which will lead to higher efficiency and margins (or democratization of the costs for the end-user). For the first time, blockchain facilitates the true P2P transfer of digital assets over the Internet without the necessity for a third party. These opportunities opened by blockchain implementation has led banks (and not only) to begin testing and development with the new technology, hoping to take a place at the forefront of innovation and stay relevant for customers in the future.

UMB Bank is surely not the only financial institution interested in blockchain technology. Fluent is reported to be in talks with other banks to bring additional partners for regional and super-regional banks to experiment with innovative blockchain technology and as an investment in what many believe is the future of financial technology. By bringing together financial institutions to experiment with the technology, the company aims to connect businesses and banks to streamline and secure the payment process, and create a platform for future development of distributed ledger tools and applications.

The LTP team has been assessing a variety of blockchain use cases based on reports from GrowthPraxis, a payments-specific research and consulting firm, and developed a great expertise on the stage we are at now with the technology. Even though the vast majority of banks are at a very early stage with blockchain, they should speed up the process as blockchain finds its way across the industries; it may become widely adopted in a very short time, leaving less space for observation and experimentation.

Lamar Wilson, Fluent’s CEO, shared his thoughts on the benefits of tapping into the space for financial institutions: What we have here is an exciting opportunity for financial institutions to receive the resources of a multi-million-dollar innovation lab from a startup in their backyard and become part of a network that is exponentially more powerful with each new participant. We are entering an era in finance where technology is making collaboration and interconnectedness is much more powerful than isolation and division.

Commenting on the company's plans, Casey added, Our future plans are to finish the banking proof-of-concept so we can start delivering our product to our business clients. At that moment, Fluent will provide a real solution to the significant inefficiencies that exist in financial flows for global supply chains using blockchain technology.