Postal Savings Bank of China (PSBC) Announces First Blockchain Financial Service

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The Postal Savings Bank of China (PSBC) announced Tuesday that it has become the first Chinese bank to use Blockchain, launching its Blockchain-based asset custody system. As part of its work, the bank has also successfully executed more than 100 real business transactions on the Blockchain since the system went live in October 2016.

PSBC worked with IBM and used Hyperledger Fabric to create the first deployment in China to apply Blockchain technology to asset custody in the financial industry.

Lyu Jiajin, President, PSBC, said:

“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 a transaction. This technology has the potential to fundamentally transform the financial industry. Today, with a booming fintech and business innovation in the financial industry, we expect to join hands with more financial institutions to build the ecosystem for a financial industry based on Blockchain technology.”

“The successful launch of PSBC’s Blockchain-based asset custody platform demonstrates the high impact the technology can have on the financial industry. As the technology evolves, we expect to work with PSBC to define and develop new solutions, drive adoption of Blockchain in more lines of business and support more organizations in China and around the world as they build their Blockchain ecosystems and create a more efficient and trusted business environment,” said Chen LiMing, Chairman, IBM Greater China Group.

As China’s leading retail banks, PSBC pays attention to the technology innovation to speed its research in advanced financial products, technologies, processes and business applications. As part of these efforts, the bank worked with IBM to develop an asset custody system built on Hyperledger.

Upon completion of a Design Thinking workshop and joint development work with IBM, the bank embarked on a two-month trial operation, during which it completed over one hundred asset custody transactions involving buying and selling bonds. During the trial, the system demonstrated Blockchain’s ability to help streamline the traditionally complex credit verification process and manage risk, helping financial institutions operate more securely and efficiently.

As one of PSBC’s core businesses, asset custody now represents an approximately four trillion RMB business. Asset custody process typically involves multiple parties, including financial institutions, clients, asset custodians, asset managers and investment advisors and auditors. Each transaction involves the settlement of large sums of money and multiple participants exchanging data, each with its own information system and often relying on verification systems such as telephone, fax and mail, potentially creating delays, discrepancies and risk with reporting between entities.

PSBC’s Blockchain solution enables the real-time sharing of information by multiple parties, eliminates repeated credit verifications, which reduces the operation process by about 60%-80%1 and helps make information exchanges more efficient. The smart contract and consensus mechanism integrates investment compliance verification regulations into the Blockchain, and ensures that transactions are completed after contracts are satisfied and a consensus is reached. The immutability and encryption built into the Blockchain ensures that account information remains secure while allowing the quick sharing of necessary information by transaction participants. Furthermore, Blockchain technology helps auditing and supervising parties quickly gain information, intervene and exercise control, thus improving the efficiency of risk management across the industry.

 

The new PSBC asset management system using Blockchain allows real-time information sharing and enhanced scrutiny among stakeholders.

Blockchain, the underpinning technology of digital currency, is expected to revolutionize the financial sector and is part of China’s 13th Five-Year Plan for information technology.

About Richard Kastelein

Founder, Publisher and Editor in Chief of Blockchain News and co-founder and director at Blockchain Partners in London/Amsterdam/NYC, Richard Kastelein is also an advisor with a number Blockchain startups doing ICOs including DECENT.ch, Inchain, Humaniq, Chronobank, eGaas and others.

He is regarded as one of the top journalists by the Blockchain and fintech communities – as is evident by his entry in the Top 150 Fintech journalists online and in the top 10 of the Blockchain Top 100 List. As a prominent keynote presenter, he has spoken on Blockchain at events in Gdansk, Amsterdam, Minsk, Dubai, Antwerp, Eindhoven etc, where he helped spread the cause for Blockchain technology and crypto-currency and, consequently, has built a notable network inthe scene.

In 2013, the European Commission appointed him as an expert for overseeing financing for emerging startups as a part of the European Commission’s 90 billion euro Horizon 2020 project, created in Brussels to promote innovation as a driving force of job creation and business ventures across Europe. He has also worked as an external expert for Innovate UK since 2012, judging startups for the UK government.

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