The largest bank in Japan (MUFG) and Hitachi Ltd are teaming up to commence their Proof-of-Concept for a Blockchain-based system to digitalize checks and possibly the rest of the banking. The system itself will be used for issuing, transferring and collecting digital checks.
The MUFG will be issuing the checks while Hitachi Group companies in Singapore will be collecting and depositing the funds. According to a press release by the MUFG and Hitachi, this will be used to prove the concept.
With the Proof-of-Concept, both companies hope that they can find any issues or flaws with the system before continuing to develop it. This will ensure harder or no security breaches in the system in the future.
“The Monetary Authority of Singapore has recently released a consultation paper on proposed guidelines for a regulatory sandbox framework to facilitate the advancement of Fintech services. With the framework, this POC testing aims to identify issues for practical use, issuing and settling check by Blockchain Technology on a system developed by Hitachi Asia Ltd.” stated the Press Release.
Singapore’s Fintech growth
As Singapore continues to expand its list of Fintech companies, Blockchain has become popular in Fintech development. With start ups such as Digix and Ripple Gateway working on Ethereum and Ripple, MUFG and Hitachi will find it easier to acquire Blockchain consultants and developers. Hong Kong is a Fintech capital with banks such as HSBC, BEA and Bank of China but companies are starting to move towards Singapore for Blockchain related reasons.
MUFG is not the sole bank working on Blockchain systems for banking. UBS, Deutsche, Citi and Goldman Sachs are all reported to be developing Blockchains for banking. With Blockchain, banks believe they can save $20 Billion each year as well as increase transactions speed and security.
With total assets well over $2.4 Trillion USD, MUFG adopting Blockchain will be a strategic move for the bank and keep it in the race to fully implement Blockchain into its banking systems.
In July, Canada’s ATB successfully moved 666 EUR to Germany’s ReiseBank in 8 seconds using Ripple’s blockchain, which means Blockchains are more efficient than traditional banking.
Curtis Stange, ATB’s chief strategy and operations officer commented on the ATB-Reisebank transaction:
“Using blockchain technology, ATB became the first financial institution in Canada to complete an overseas payment in a matter of seconds, without Blockchain, that transaction would have taken two to six business days”
Back in May, Japan introduced new laws that allowed it to recognize digital currencies such as Bitcoin. Even though some Japanese banks are still cautious and fear the Mt.Gox situation, they continue to open up to Blockchain technology.