Bank partners with IBM to launch first blockchain service in China
Thu 12 Jan 2017
Postal Service Bank of China (PSBC) has selected IBM as a partner for its blockchain asset custody system, launched this week. This represents the first instance of blockchain asset custody deployment in China.
PSBC used the IBM Hyperledger open-source blockchain platform to create this service. It has already successfully conducted over 100 transactions involving the sale and purchase of bonds since system trials began in October 2016.
The trial period allowed the bank to demonstrate the new system capabilities, including streamlining processes, increasing security and efficiency of transactions while managing risk.
Asset custody transactions are a core business for PSBC, and are a particularly attractive to proponents of distributed ledger technology, as the traditional methods of verifying asset transfers are manual and rife with inefficiencies and potential for errors.
Distributed ledger, which provides secure updates to all parties in real time, minimizes inefficiencies as well as risk in these types of transactions. The PSBC blockchain trial showed a 60-80% reduction in operational exchange for each transaction, making the process significantly faster and more efficient. Additionally, regulatory constraints and auditing capabilities are built into the distributed ledger system, ensuring that all parties comply with relevant transaction restrictions.
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.”
PSBC is one of the leading banks in China, with over 500 million retail customers. It completed a successful IPO on the Hong Kong Stock Exchange last year, raising over $7.4 billion USD in the pre-IPO share sale, making it the largest IPO since Alibaba in 2014.
Just last week, the Hyperledger Project, a cross-industry collaborative effort to promote distributed ledger technologies, announced that it would establish a group dedicated to forming relationships between local teams in China and the Hyperledger global community. The Hyperledger Technical Working Group China (TWG China) was created to address increasing interest in blockchain technology in China, and to that end will organize training and activities for members in China. The group has announced its first hackathon will take place in March 2017.