South Korea’s second-largest commercial bank, Shinhan Bank, has begun working on a blockchain-based angle in reducing human errors in banking processes.

It is the latest in a string of blockchain initiatives being pursued by a growing number of financial institutions as information technology pursues tighter integration with traditional financial services.

An initial step was taken to integrate blockchain with interest rate swap – a complex financial contract – involving the exchange of fixed interest rates from a floating rate or vice versa in order to mitigate the risks of exposure to fluctuations. It appears that Shinhan Bank is the first as a local financial services firm to implement the technology adopted last month.

The bank has found a use for smart contracts in automated processing of derivative transactions, such that tasks handled by bank staff are now conducted through a computer program. The Korean Times reported that this “leaves no room for error thereby improving accuracy and reliability of work products”.

Now, the bank wants to resolve to handle financial record-keeping on the blockchain, as a ledger with immutable and accurately efficient properties. This is expected to improve the overall efficiency of banking operations.

Shinhan Bank has been investing months of research and training of its staff via its blockchain lab department, familiarizing them with blockchain and its applications.

The bank declared: “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.”

Some of the departments the bank is seeking to apply the technology to include financing businesses with export or import, lending, derivatives, stocks, bonds, foreign currency exchange or remittance and pension, as well as processes “that require frequent data sharing and verification with outside bodies”.

As reported by another local media outlet about a year ago, Shinhan Bank announced that it was creating a cryptocurrency wallet service for its customers and that it was doing so to leverage the “strong security of the bank and the advantages of cryptocurrency”. It had also formed a partnership with KT platform service in August to develop blockchain technology service.

The blockchain use case in South Korea continues up the trend with expansion from fintech to other industries. Continuous developments in both cryptocurrency and blockchain-related affairs seem to be happening because of the country’s pro-industry policies and incubation support.

 

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