Shinhan Bank initiated a project to implement blockchain-based work process to expand the use of the new technology to the full extent of its financial services as well as internal protocol management, it said Monday.
The effort spearheaded by the bank CEO Wi Sung-ho is part of a digital transformation, an initiative led by many global financial services firms amid a growing need for tighter integration between information technology and traditional financial services for efficient management in a fast-changing business environment.
The bank said blockchain was fully adopted with transactions involving Interest Rate Swap (IRS) Nov. 30, the first time a local financial services firm has implement the technology in the sophisticated form of finance.
Similarly, the bank adopted “Smart Contract,” a financial method used for derivatives transaction, where tasks formerly managed by workers were undertaken by the computerized program, which leaves no room for error thereby improving accuracy and reliability of work products.
“Prior to the blockchain-based process, there had been no standardized rules governing keeping and managing financial records, a reason why market participants had to rely on their own records which often times led to errors despite the cross-checking process requirement,” a Shinhan official said.
“The new system helps remove such human errors and helps improve work efficiency through clearer, task-related communications rather than wasting time on correcting mistakes. The program will be expanded after it proves to be stable. We will continue to develop new technology that can be put in place for various departments.”
Meanwhile, Blockchain Lab, a special strategy-oriented research body within the bank, has completed a process whereby company officials were trained for customer services that they deem have room for improvement with the use of blockchain technology.
About 400 working-level, senior officials attended training sessions held over 20 occasions between March and November and were encouraged to come up with ideas to facilitate the project in departments that require frequent data sharing and verification with outside bodies.
They include financing businesses with export or import, lending, as well as that involving derivatives, stocks, bonds, foreign currency exchange or remittance and pension.
Blockchain, known to be resistant to data modification, is considered an efficient, verifiable and permanent method of keeping record of transactions between parties given that the data recorded cannot be easily altered retroactively, which helps ensure accountability.