US FinTech firm buys blockchain specialist Elevence Digital Finance

06 May 2016 Consultancy.uk

Digital Asset Holdings, a US based developer of distributed ledger technology for the financial services industry, has acquired Elevence Digital Finance, a Swiss technology firm that is a spin-off of consultancy BearingPoint.

Founded early last year, following seed-funding by BearingPoint Ventures, the venture capital arm of management and IT consulting firm BearingPoint, Elevence Digital Finance (Elevence) is a technology startup that helps financial institutions with modelling and executing financial flows, including transactions that support trading, clearing and settlements, across a range of financial contracts (cash, securities, derivatives).

The rationale behind the launch of the BearingPoint spin-off was to create a concept for a distributed digital database, authentication system and a basic system implementation (blockchain), and in the long run to offer a market solution. On the back of growing demand for its products, riding on the high waves of the blockchain revolution, Elevence has since inception grown to a team of eight professionals, comprising software architects, consultants, and financial professionals with backgrounds in functional programming, quantitative finance and algorithmic trading.

In a bid to accelerate growth and boost its odds of scaling up, Elevence Digital Finance has decided to join forces with Digital Asset Holdings (Digital Asset), a larger FinTech firm headquartered in New York, US. The company has seen rapid expansion since it was launched in 2014, and, propelled by contracts with a few large clients and three acquisitions (Hyperledger, Bits of Proof and Blockstack), Digital Asset currently operates with further offices in London, Sydney, San Francisco, Zurich, Tel Aviv and Budapest.

The addition of Elevence will, according to Blythe Masters, CEO of the company and a former banker (15+ years with J.P. Morgan), complement Digital Asset's existing software by providing a “new, verifiable way for parties to a transaction to independently prove updates to a distributed ledger while preserving data confidentiality.” He adds: “We will harness the power of Elevence’s technology and its team to enhance our offering for the financial services industry.”

Elevence’s modelling language is capable of expressing any right or obligation, including cash, securities and derivatives, whereby the code defines the considerations between parties, and determines how these contractual relations can evolve over time. This provides relevant parties with a unified view of current and future rights and obligations on a need-to-know basis, rather than revealing confidential information as in Smart Contract systems. The firm’s technology will be integrated into Digital Asset’s software stack, combining modelled asset workflows with a distributed ledger to ensure that previously siloed records are synchronised and accurate.

Vincent Peikert, CEO of Elevence, says he is delighted with the deal, describing Digital Asset as a “leading provider of distributed ledger technology.” He adds: "They are an ideal partner for Elevence, and joining forces will enable us to offer the broadest portfolio of solutions to the benefit of our customers.”

Commenting on the transaction, Marcel Nickler, Partner and Regional Leader for Central Continental Europe at BearingPoint, says he is “happy to see” that an innovative firm that has incubated under the wings of BearingPoint Ventures has achieved a success. Looking ahead, Nickler highlights that he has high expectations of the joining of forces, as well as blockchain technology in general. “Blockchain technology is a potential game changer for global financial markets. The shared ledger technology that underpins bitcoin has the power to transform business models, connect new counterparties and generate sweeping efficiencies.”

According to data from KPMG, global investments in FinTech startups and scaleups reached $19 billion last year, a record, while another analysis, by EY, found that the UK can call itself the FinTech capital of the world.

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