Original members of the R3 blockchain group, which last week saw several big banks depart, have indicated they will only invest around a third of the initial funding target.

Financial institutions involved in the R3 blockchain consortium have signalled they will only invest $59 million in the company's first round of funding, a significantly underwhelming figure compared with the initial $150 million target, a person close to the matter told Reuters last week.

The latest development comes just days after numerous big banks including Goldman Sachs, Morgan Stanley, Santander, and National Australia Bank, declined to contribute to funding and confirmed their withdrawal from the process, this publication reported last week.

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 the technology 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. 

R3, a New York-based blockchain technology start-up, originally aimed to raise $200 million from its fee-paying members and investors in exchange for a 90 per cent stake to fund its efforts in developing Blockchain-based technology for the financial services industry. However, the target was later lowered to $150 million in return for a 60 per cent stake.

The company has invited its original 42 bank members to invest first and will subsequently reach out to the other roughly 30 banks it works with, as well as external companies, throughout the next nine to 12 months, the Reuters source explained.

Of those original members, 36 have expressed indications of interest through stakes ranging from $3.5 million to $1 million each, the source added.

Goldman Sachs was one of nine original members of the project, which was kick-started last September to explore ways to eliminate the costly and time-consuming processes that facilitate payments and settlements. Since its birth, the group's membership base has swelled to more than 70 firms.

Earlier this month, Singapore's financial regulator, the Monetary Authority of Singapore, jumped onboard R3's blockchain bandwagon.