Banks prepare to deploy blockchainThe country’s financial institutions will begin pilot service of integrated blockchain platforms, the cutting-edge technology best known for powering bitcoin, by the end of this year.
The Financial Services Commission said Tuesday that two consortia representing the banking and securities sectors will work toward introducing standardized blockchain systems for their industries.
The blockchain is a decentralized, publicly distributed ledger designed to keep exchanges secure and preserve transaction records more safely and accurately. Its application varies, but one of the consortia comprising 16 Korean banks will establish a blockchain-based system that will make international wire transfers easier.
Current regulations allow users to transfer money abroad to one designated bank only. A blockchain system will allow users to more easily change that designated bank.
The consortium aims to complete the platform by the second quarter for test operation this year, according to the Financial Services Commission.
The other consortium representing 25 securities companies will apply blockchain technology to identity management. Brokerages currently all have different identity verification systems, meaning clients have to install multiple cumbersome programs when working with different companies. Blockchain technology, on the other hand, can serve as a digital watermark and help brokerages track transactions in real time.
“The securities companies concluded that identity verification is the sector where blockchain technology can contribute a lot,” said Kim Tae-ryong, head of the information systems division at the Korea Financial Investment Association, which represents the country’s securities industry. “With the blockchain system, users can complete identity verification at the same time they log in without the need to install separate programs.”
Kim added that the security platform can be used on electronic home trading systems as well as brokerage websites. “If the platform is well received, we plan to expand its use to the management of bond and equity transactions.”
The Financial Services Commission announced last month that it would launch a joint government and private-sector blockchain consortium of 30 or so financial companies to research the new technology. During their meeting on Tuesday, analysts called for a new law that would hold financial authorities, including the central bank, accountable if accidents occur during financial transactions using blockchain technology.
Experts worldwide forecast that more financial players will turn to blockchain technology. Late last year, IBM predicted that 15 percent of big banks will use blockchain technology by 2017.
BY PARK EUN-JEE [firstname.lastname@example.org]
More in Finance
Kim Kwang-soo named as sole candidate to head banking federation
Kospi hits record 2,602.59 as optimism continues after U.S. election result
Dollar deposits jump as punters bet on currency's rebound
Reservation app operator Yanolja to go public next year
KDB says Hanjin KAL funding on the up and up