The last few months have seen major changes at Partior, the DLT settlement network backed by DBS, JP Morgan, Standard Chartered and Temasek. In May, new CEO Humphrey Valenbreder joined from bunq, followed by a $60 million funding round in July. Not long after, the company laid off more than a quarter of its staff (as first reported by Tech in Asia), leaving a team of around 90 people.
Press reports mentioned ‘unforeseen technical hurdles’ and grievances about culture changes on Glassdoor. Given Partior is considered a heavyweight initiative in the DLT payments arena, we caught up with Mr Valenbreder to find out more. He addressed both these points without hesitation.
Growing pains and culture change
The new CEO sees his role as transitioning the company from a startup to a scale up.
The initial startup phase of finding product-market fit is characterized by a spirit of exploration and creativity. For Partior it also meant “heavy lifting” to build the foundations. During this time, it might have tailored solutions for new partners. However, as a company scales, it needs to industrialize its offerings, making them repeatable and predictable, which necessitates standardization.
Otherwise, if you quadruple your revenues, you might have to quadruple your team size, which is not viable.
He views that standardization as curtailing the previous creative latitude. “With the full respect and recognition of the people that we had to let go… the freedom that you had until now might not be the freedom and the creativity required going forward,” said Mr Valenbreder.
Regarding the unforeseen technical hurdles, he mentioned the time consuming and complex process of meeting all the compliance, risk and IT security requirements to integrate a new solution with core banking systems. That’s a story Ledger Insights has heard many times before, but it’s exaggerated for Partior. Many DLT solutions have a single integration point. For a cross border settlement system, every settlement bank has multiple jurisdictions requiring the integration process.
Despite standardizing the solution, integrations for each bank may very well be custom. Going forward, the larger banks may work with system integrators to sort out connectivity, rather than Partior building a proprietary solution for each bank .
Developing the DLT network’s density
Meanwhile, Partior’s first solution is a DLT-based cross border payment network, tokenizing the correspondent banking model. The core of the network are large correspondent banks such as DBS, JP Morgan and StanChart, with other banks and clients connecting to make instant cross border payments, 24/7. This delivers the holy grail of allowing corporate treasurers to program money movements around the world precisely when they need to. While JP Morgan provides something similar with JPM Coin, it only works between JP Morgan accounts. Partior is a multi-bank solution that complements JP Morgan’s offering.
So far the network supports US dollars, Sing dollars and euros with several other currencies planned.
Additionally, Partior is working on other solutions, including FX payment versus payment (PvP) which it recently piloted, and intraday FX swaps.
As part of the scaling up process, Mr Valenbreder wants to increase the “network density”. This entails incorporating an international network of banks, branches, and currencies, which collectively will lead to increased transaction volumes. He likened this to the value of a mobile phone network, which is contingent on its density. For instance, if there are only two mobile subscribers making just one call per day, the network’s overall value is miniscule.
Regarding the network expansion, the Partior CEO alluded to multiple potential announcements in the coming months, mentioning an expansion in the Middle East and Europe. He did not specify which jurisdictions.
New member banks?
More than a year ago we reported (based on sources) that Deutsche Bank was considering joining Partior. Mr Valenbreder also mentioned exploring a link with mBridge, the central bank cross border payments network. Within the Middle East, the UAE is one of the founding mBridge participants, and Saudi is also a new member.
Other planned currencies include the Brazilian Real, so the addition of one or two Brazilian banks is on the cards. Bruno Batavia is Director of Emerging Technology at Valor Capital, one of the Series B backers. He is also the former deputy project manager of DREX, Brazil’s CBDC initiative. While DREX is domestic, something like Partior could be a path to a future cross border initiative.
On that point, the Partior CEO sees a potential role for the company in acting as an orchestration and interoperability layer between multiple different DLT initiatives, some of which might be domestic and others cross border. Given geopolitical tensions, the fragmentation of global payment systems is inevitable, with mBridge leading the way. Hence, there is a need for interoperability. It’s notable that mBridge and the other BIS cross border payment initiative, Project Agorá, involve a different set of central banks.
Project Agorá as competition?
In fact, Partior’s vision of transforming correspondent banking using tokenization has been validated by Project Agorá, which also includes 41 private institutions. It’s one of the BIS’ largest innovation projects. From the outset, the intent is to produce a prototype that can potentially go further, rather than being purely experimental.
On the one hand, Partior is already in production. So is Agorá with its heavyweight membership a competitor?
“There are very few live infrastructures that have proven to be able to do what we do,” said the Partior CEO. “So I think that we could be part of the solution instead of a competitor to Agorá.”
Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects. Find out more here.
