The Postal Savings Bank of China Co Ltd announced on Tuesday that it has launched a blockchain-based system for its asset custody business. This is the Chinese banking sector's first application of blockchain technology to the core banking business system.
Jointly created by PSBC and IBM, the system was launched in October 2016 and has carried out more than 100 transactions in real business environments since then.
An asset custody business typically involves four parties－clients, asset managers, asset custodians and investment advisers.
Previously, each transaction involved the settlement of large sums of money and multiple participants exchanging data－each with its own information system and often relying on telephone, fax and email for verification. The data exchanging process creates delays and potential discrepancies.
PSBC's blockchain solution enables real-time sharing of information among multiple parties and eliminates repeated credit verifications, thus reducing the process by about 60 to 80 percent.
The immutability and encrypted verification built into the blockchain ensures that account information remains secure, while allowing quick sharing of necessary information by transaction participants. In addition, blockchain also helps auditors and regulators access information quickly and exercise intervention and control in advance, thus improving the level of risk management for the banking sector.
Lyu Jiajin, president of PSBC, said: "Thanks to blockchain's advantages in safety, sharing, mutual trust and openness, we can use the technology to build a trust system effectively among various parties of a transaction, achieve highly efficient and low-cost flow of information and value, and solve the problem of trust in financial activities. It will bring a revolutionary impact to the transformation and development of commercial banks."
The bank hopes to work with more financial institutions to build a blockchain-based ecosystem and deepen its cooperation with technology companies, including IBM, to integrate advanced financial technologies into the banking business, he said.
A report by the IBM Institute for Business Value shows that 65 percent of banks are looking forward to applying blockchain technology to their products. Eighty percent of banks believe blockchain will revolutionize certain areas, such as trade finance, corporate loans and reference data. Fifteen percent of banks will implement commercial blockchain solutions in 2017, said Chen Liming, chairman of IBM Greater China Group.
IBM is expanding its blockchain consulting service globally and pushing forward the application of blockchains in real corporate scenarios. Through its cooperation with Japan-based Bank of Tokyo-Mitsubishi UFJ, the company applied blockchain technology to the design, management and implementation of contracts among business partners, greatly improving efficiency and reliability, Chen said.
