CEO Peter Randall says SETL is providing the "rails" — banks can build the "rolling stock." Oli Scarff/Getty Images Heavyweight fintech startup SETL has launched a platform based on the technology behind bitcoin that allows buy-side and sell-side financial institutions to band together and quickly set up a private and secure network to trade with each other on.

SETL's new OpenCSD product lets people set up a closed blockchain network so institutions can quickly pay, settle, and clear cash and other financial instruments using the technology.

CEO and cofounder Peter Randall told BI: "What it's really responding to is the fact there are a lot of people out there talking about it but they're talking about it because they haven't actually got anything to show. We have both an enormous amount of experience in how to launch projects like this but also an enormous amount of experience in terms of actually having working prototypes. We're much more advanced than the competition."

Banks have been going crazy for the technology, which was first invented to underpin bitcoin. Almost every major investment bank is experimenting with the technology in one way or another. Because it is based on a network effect banks must work together and over 40 have signed up to industry-wide consortium R3.

Randall says: "There's a lot of talking going on but there's a lot of opportunity being missed because a lot of people really don't know what they're talking about. SETL can demonstrate tens of thousands of transactions per second and billions of transactions a day."

Randall is a financial technology veteran, helping to found tech savvy stock exchange Chi-X in the 2000s. Chi-X was the first pan-European equities exchange to launch in 2007 and used technology to make trading cheaper and quicker. SETL is also being led by Anthony Culligan, a veteran hedge fund investor.

Banks are excited about blockchain tech because it has the potential to strip out huge amounts of cost for things like clearing and settling by reducing paperwork and human error. It can also make things much faster.

Blockchain is a new kind of database infrastructure. Rather than having one database that is centrally stored and must be matched by others, blockchain allows records to be updated simultaneously across a network — a bit like the difference between using Word and Google Docs. The technology uses complex cryptography to stop people changing transactions once they've been signed off by members of the network.

Here's a handy chart from Goldman Sachs explaining how it works in the case of bitcoin: Randall says: "The current clearing and settlement system is a form of sophisticated Morris dancing. It takes a long time, every leg has got bells on it, and it's not understandable to anyone watching it outside of the system but everybody within the system knows exactly what they've got to do. It's expensive and slow and effectively a sort of rural industry."

"What the blockchain offers as a promise is it can do to payments and finance what the container did to shipping and world trade. It standardises those payments. It helps to reduce costs, improve transparency, improve liquidity, improve capital efficiency."

The current clearing and settlement system is a form of sophisticated Morris dancing

OpenCSD is one of the first "off the shelf" products that lets banks develop a blockchain product, rather than building it completely from scratch. It has financial grade security and built-in features to help banks verify the identity of who they're dealing with and message each other.

Randall says: "People that want to engage can take this internally and start developing their own actions but using the rails that we've provided — the stations, the sidings, the points, the signals. They are able to build the rolling stock and the box cars and the carriages and the engines."

OpenCSD is available on a subscription basis although a price has not been given. Banks and other financial institutions can access it through and API. Projects could be up and running within 12 months, according to Bloomberg.

SETL launched last July and announced in December it was in the process of raising £30 million. SETL declined to comment on its fundraising efforts on Wednesday when BI asked for an update. However, Randall said the company was close to making an announcement.

SETL's chairman is Sir David Walker, whose CV includes stints as an executive director of the Bank of England, chairman of Barclays, chairman of Morgan Stanley International, and deputy chairman of Lloyds.