How financial services can see gains with blockchain

By | 2 minute read | June 18, 2019

Shangai city

For banks and other financial enterprises, collaborative solutions are essential to digital transformation. Yet such firms are often caught in the “prisoner’s dilemma,” meaning they fail to cooperate even when it would be beneficial. The concept stems from the lack of trust between two prisoners being questioned separately by the police: because they distrust each other, they make decisions harmful to both.

We at CIB Fintech believe that blockchain can overcome this dilemma through its distributed ledger technology that is security-rich, transparent and trusted by all network members. That’s why we developed the Fintech Cloud blockchain services platform. It targets small and midsize financial enterprises that may lack the personnel or budget to develop collaborative blockchain solutions on their own.

The services are based on the IBM Blockchain Platform delivered from the IBM Cloud. We partnered with IBM because of the robust, scalable and security-rich performance of the IBM Cloud, and its rich development environment that offers easy access to APIs for blockchain, AI and analytics. And IBM has invested heavily in blockchain expertise and code to enhance the open-source Hyperledger Fabric that powers the Blockchain Platform. In addition, IBM’s extensive experience in the financial industry has served us well.

E-contracts verification and e-bill payments

Our blockchain platform comprises two pre-built services, one for online signature authentication in e-contracts and one for electronic bill payments. The platform’s service matrix includes a built-in alliance of banking, securities, trust, insurance and digital financial service providers that are collaboration-ready.

Through blockchain’s immutable and transparent transaction ledger, the e-contract service verifies online signatures with the same legality as a handwritten signature or seal notarized under Chinese law. It is the first such solution in China, automatically storing signed digital contracts in the blockchain as permanent, tamper-proof records.

The digital bill payment service enables trusted, real-time verification of transactions between users and alliance members. With one account per network member, the service eliminates the need for payment intermediaries such as correspondent banks, payment processors and clearing houses. It features blockchain smart contracts that can automatically divide payments among different financial entities, such as splitting a mortgage payment between the property tax office and the bank.

Reducing digital transaction friction

We believe these services will meet the needs of small and midsize financial institutions by powering collaborative solutions they can trust. Blockchain’s potential to reduce friction in core digital transactions can improve the customer experience, streamline workflows and foster digital innovation.

Blockchain platform services are among CIB Fintech’s initial cloud offerings. Over time, we plan to develop other services capitalizing on advanced technologies such as IBM Analytics and IBM Watson. We trust these services will help our customers make rapid progress on their digital transformation journey.