IBM blockchain technology powers Postal Savings Bank of China

IBM ChinaPostal Savings Bank of China (PSBC) in association with IBM used the Hyperledger Fabric to apply blockchain technology to asset custody in the financial industry.

PSBC, as part of launching the first blockchain-based asset custody system in China, also executed more than 100 real business transactions on the blockchain since the system went live in October 2016.

The retail bank completed over one hundred asset custody transactions involving buying and selling bonds and the system demonstrated blockchain’s ability to streamline complex credit verification process and manage risk during two-month trial operation.

“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,” said Lyu Jiajin, president of PSBC.

Asset custody, as one of PSBC’s core businesses, represents four trillion RMB business. Asset custody transaction involves the settlement of money and multiple participants exchanging data, each with its own information system and often relying on verification systems such as telephone, fax and mail, potentially creating delays, discrepancies and risk with reporting between entities.

IBM said PSBC’s blockchain solution enables the real-time sharing of information by multiple parties, eliminates repeated credit verifications, which reduces the operation process by about 60 percent-80 percent1 and helps make information exchanges more efficient.

IBM said the smart contract and consensus mechanism integrates investment compliance verification regulations into the blockchain. The encryption built into the blockchain ensures that account information remains secure while allowing the quick sharing of necessary information by transaction participants.

Blockchain technology helps auditing and supervising parties quickly gain information, intervene and exercise control, thus improving the efficiency of risk management across the industry.

“As the blockchain technology evolves, we expect to work with PSBC to develop new solutions, drive adoption of blockchain in more lines of business and support more organizations in China and around the world,” said Chen LiMing, chairman of IBM Greater China Group.

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