Four banking behemoths have confirmed their departures from the consortium.

Goldman Sachs, Morgan Stanley, Santander and the National Australia Bank have all withdrawn from the R3 blockchain consortium within the space of a week, a sign that big banks are refocusing their interests in the disruptive technology elsewhere.

Blockchain technology, a virtual distributed ledger of transactions shared peer-to-peer, can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. It is already known as the platform for the controversial digital currency bitcoin. 

Supporters of blockchain believe it could reduce hidden expenses in the financial system by ousting inefficiencies and the need for trade insurance, across areas such as payments, syndicated loans and equity clearing. Cost-cutting technology like this would be welcomed in an industry immersed in low interest rates, stringent regulation and heightened capital requirements.

Goldman Sachs was one of nine original members of the project, which was kick-started last year to explore ways to eliminate the costly and time-consuming processes that facilitate payments and settlements. Since its birth, the group's fee-paying membership base has swelled to more than 70 firms, the most recent addition being Misheng, a Chinese private bank, earlier this week. 

R3 recently lowered the amount it aims to raise in its first round of equity funding from $200 million to $150 million, planning to give members a 60 per cent equity stake in exchange for the capital, according to a report from Reuters.

A source close to the process at Goldman Sachs told this publication the group quickly became “saturated” as new members came pouring in, which resulted in a lack of headway being made and the project's prospects eventually becoming “unrealistic”. The bank baulked at being asked to contribute to funding alongside a plethora of other investors and is subsequently exploring other blockchain models, this publication understands.

Santander, the Spanish lender, also dropped out for similar reasons, as the firm is currently testing “more relevant and more attractive” blockchain technology projects and proposals, including internal models, a source close to the matter told this publication. 

Morgan Stanley and the National Bank of Australia failed to respond to requests for comment on the matter.

In a statement, R3 commented: “As with any project of this scale and scope, we always expected the make-up of the consortium to change over time. Developing technology like this requires dedication and significant resources, and our diverse pool of members all have different capacities and capabilities which naturally change over time.”

Still, some organisations appear upbeat about the project's potential outcomes. Last week, Singapore's financial regulator jumped on R3's blockchain bandwagon.

Earlier this year, both Goldman Sachs and Morgan Stanley reportedly filed for blockchain patents in the US.

Of course, R3 is not the only developing blockchain project that has piqued banks' interest. ABN AMRO, the Dutch banking group, recently joined forces with Delft university, the Netherlands' oldest technological university, and 14 other partners on a project that aims to apply blockchain technology to the logistics sector.

Earlier this month, a large Korean financial institution and a Nordic bank announced that they are collaborating with blockchain companies to explore the ways in which virtual currency transactions can be facilitated in the near future. 

This publication will continue to monitor the ongoings of the R3 consortium and will update news coverage on the matter accordingly.