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By Paul Vigna 

A new consortium of banks and tech giants was set to announce its formation Tuesday, the latest stab at expanding open-ledger "blockchain" technology that could shave billions off the cost of basic Wall Street functions.

The latest project, which was to be unveiled in Brooklyn, is called the Enterprise Ethereum Alliance. The nonprofit foundation, which includes J.P. Morgan Chase & Co., Microsoft Corp., Bank of New York Mellon Corp., Intel Corp. and Banco Santander SA, shows the fight is continuing to develop the killer back-office app in finance, despite increased focus since last year's election on revenue growth.

So far, there has been more hype than tangible progress on blockchain at banks. The group announcing itself this week is building a platform based on an open-source software project J.P. Morgan started last year called Quorum, which aims to eliminate the need for a costly infrastructure of middlemen and third parties overseeing transactions.

Quorum uses the core concepts behind blockchain, the open-ledger technology that underpins the digital currency bitcoin. But it is based on Ethereum, an alternative version of bitcoin.

Blockchains have been appealing to banks because they are networks of connected computers sharing the same database and record-keeping. That eliminates costs, but raises questions about how banks would handle proprietary information on such a transparent ledger.

The Ethereum Enterprise Alliance expects to launch a working version of its protocol, called EntEth 1.0, this year, and will be inviting developers to help build it out and build products on it. The goal is to create an open, flexible platform that would at the same time preserve some privacy for banks.

The alliance is a sign that the race to build out this technology on a large scale is heating up again. There have been a number of attempts over the past two years, but none have yet produced a working version. Many of the banks involved have more than one iron in the fire, in fact. J.P. Morgan, for example, is also a shareholder in startups Digital Asset Holdings LLC and Axoni, and also has some of its top coders working on Quorum.

Whichever group gets there first, a working blockchain-based network would be a big advantage for the financial-services industry. In January, the consulting firm Accenture, which also is part of the alliance, estimated that eight of the world's largest investment banks could realize an average of $10 billion in annual cost savings, by 2025, assuming blockchain technology reaches widespread use.

--Telis Demos contributed this article.

Write to Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

February 28, 2017 14:47 ET (19:47 GMT)

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