The announcement comes following a two-month trial that saw over a hundred real business transactions executed on a blockchain developed using the open-source Hyperledger fabric. The trial saw transactions involving buying and selling bonds in one of PSBC’s core businesses, an area of banking that’s approximately worth 4 trillion RMB (approx. $577 billion).
The implementation of distributed ledger technology also helps with compliance concerns, ensuring that transactions are completed only after contracts are satisfied over investment verification regulations, alongside consensus.
With over 40,000 branches and 500 million individual customers in China, the bank sees its assets totaling 7.3 trillion yuan ($1.09 trillion, 2015 figures), making it figure among the top 25 banks in the world.
With the announcement, PSBC president Lyu Jiajin talked up blockchain technology’s potential, stating:
Image from Shutterstock.
Blockchain technology has the potential to eliminate the trust frictions in financial business activities at a very low cost and creates trust and enables the efficient exchange of information for all the parties involved in transaction. This technology has the potential to fundamentally transform the financial industry.
More specifically, the blockchain solution enabled real-time sharing of information between participants on the ledger while eliminating repeated credit verifications that renders the entire process to run more efficiently using smart contracts and a consensus mechanism.
The sweeping blockchain tech rollout by PSBC for one of its core banking processes is only the beginning for the innovation’s development and rollout in China. The country’s five-year plan leading up to 2020 has underlined blockchain development in its technological roadmap. In light of the country’s soaring interest in blockchain technology, the Linux Foundation-led Hyperledger Project announced a spin-off ‘Technical Working Group China’ (TWG China) this month. The working group was installed after over a quarter of Hyperledger’s 100+ member-base compromised of Chinese members, highlighting the country’s strong interest in the innovation.
The Postal Savings Bank of China (PSBC) has announced the launch of its blockchain-based asset custody system, in partnership with IBM, today. IBM claims this to be the first case of blockchain technology to asset custody in China.
A typical asset custody transaction sees settlement of large sums of money with multiple participants in the process exchanging data while reliant on legacy verification systems individuals. The blockchain trial, the PBOC revealed, helped streamline traditionally complex credit verification process while managing risks to enable more efficient operations among financial institutions.
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