Blockchain technology gains momentum in Asia as major financial services firms are exploring the tech in hopes to gain in efficiency and cut costs.
In Asia, Japanese banks and financial services firms have been undeniably the most active in the field with an increasing number of players trialing blockchain-based trading platforms and payments systems.
Japan’s largest bank Mitsubishi UFJ Financial Group (MUFG) has significantly stepped up its effort to become a leader in blockchain, joining the world’s largest bank consortium dedicated to the technology in September 2015, and committing itself to a number of related projects.
The bank was involved in the development of the Chain Open Standard framework, a collaborative effort unveiled earlier this week aimed at developing a blockchain infrastructure that can operate at a much larger scale.
MUFG is also reportedly working on the creation of its very own digital currency, dubbed “MUFG coin,” which aims at replicating the peer-to-peer exchange and mobile wallet functionality in bitcoin but without the need of relying on a network of miners.
Japan Exchange Group (JPX) as well has committed itself to the technology, announcing earlier this year a partnership with IBM Japan to conduct proof-of-concept tests on distributed ledger technology for use in trading in low transaction markets.
Mizuho Bank, Fujitsu, and Fujitsu Laboratories, are all exploring the merits of blockchain technology to reduce the processing time for cross-border securities transactions.
Others, such as SBI Holdings, have opted to collaborate with the startup community.
SBI Sumishin Net Bank, a digital bank established by SBI Holdings and Sumitomo Mitsui Trust Bank, has partnered with Singapore’s Dragonfly Fintech and Japanese think tank Nomura Research Institute (NRI) to test and develop blockchain-based infrastructures for banks.
The collaboration aims at enhancing Dragonfly Fintech’s blockchain framework called the Automated Clearing and Electronic Settlement, and turn it into a solution which banks could use to conduct most of their operations.
Meanwhile, SBI Holdings has set its sights on the Ripple payment protocol and settlement system, which it expects could well be the driving force of blockchain adoption in Asia.
The firm is working with Ripple to launch SBI Ripple Asia, a new company that will focus on selling and installing Ripple’s enterprise solutions for cross-border payments at banks across the continent.
That said, Japan isn’t the only country interested in blockchain’s disruptive potential as one of South Korea’s largest bank KB Kookmin Bank is reportedly developing a blockchain solution for international remittances using technology provided by domestic bitcoin startup Coinplug.
The ChinaLedger Alliance, unveiled last week, is China’s response to the global blockchain craze. The consortium, led by Wanxiang Blockchain Labs, brings together 11 regional commodity exchanges, equity exchanges and financial asset exchanges. The organization aims to adapt and develop existing blockchain technology to meet the needs of Chinese businesses and set standards across the industry, according to a report by Bitcoin Magazine.
In different parts of Asia, the blockchain mania has been widely supported by the public sector with a number of governmental agencies praising the benefits of the technology in all sorts of industry.
Japan’s vice minister for international affairs Masamichi Kono, believes that Asia has what it takes to become a global leader in disruptive technologies such as blockchain, given the region’s historical capability of leveraging cutting-edge technologies.
“An area of strength for Asia may be in making the best use of technological innovations,” Kono told the audience during a keynote speech at the OECD-ADBI Roundtable on Capital Markets and Financial Reform in Tokyo.
“Particularly for those ‘disruptive technologies’, including distributed ledger and blockchain technologies, Asia has a competitive edge, and should be in a position to be able to deploy those new tools in financing growth in the region in a more cost-effective yet safe manner,” Kono said.
Moving down south, Singapore has been unarguably one of the most tech-friendly countries in Asia.
In November 2014, Prime Minister Lee Hsien Loong launched the ‘Smart Nation’ initiative, a nation-wide project aimed at turning Singapore into the world’s first Smart Country where the pervasive use of technology promises to improve the lives of citizens.
As part of its ‘Smart Nation’ initiative, Singapore is working towards becoming a ‘Smart Financial Center,’ in which financial technologies (fintech) including mobile payments, biometrics, blockchain tech, big data and learning machines, are expected to increase efficiency, create opportunities and allow for better management of risks.
In this regard, the Monetary Authority of Singapore (MAS), is committing SG$225 million under the Financial Sector Technology and Innovation (FSTI) scheme. A portion of the fund has already been allocated to back a number of institution-level projects including a decentralized record-keeping system based on blockchain technology for trade finance.