Blockchain financial applications: China's first cross-institutional scenario with real transaction volume exceeding one million

Reporter: Pencil lead

At the end of March 2017, the number of data records of the application running in the production environment of China's first cross-institutional alliance chain launched by WeBank reached 2.2 million. The application mainly optimizes the reserve fund management and reconciliation process in the joint loan business through blockchain and distributed ledger technology. Since the online trial operation began in August last year, three banking institutions, including Shanghai Huarui Bank, Luoyang Bank and Changsha Bank, have been connected to the WeBank blockchain network. Through half a year of real production data verification and zero-failure operation, the underlying blockchain platform has confirmed its advantages of self-controllability, security and reliability. WeBank also plans to launch an open source version in the second quarter of this year.

Trend-setting: The era of opportunity for the integration of distributed business and distributed technology

In recent years, the popularity of the "distributed business" model, which is mainly characterized by sharing economy and value linkage, has spawned a large number of new cross-institutional innovative cooperation scenarios. "Distributed technology" represented by blockchain and distributed ledger technology has gradually begun to be applied to the production environment of "distributed business" with its better elasticity, higher economic utility and fault tolerance mechanism. The above-mentioned blockchain-based joint loan reserve fund management and reconciliation platform is a typical example.

Weizhong Bank's core product, Weilidai, is a pure online personal small-amount credit revolving consumer loan product launched for WeChat users and mobile QQ users. It adopts peer cooperation and joint loan models to issue loans to customers, and 80% of the loan funds are issued by cooperative banks. As a typical scenario of "distributed business", this product is very suitable for using blockchain and distributed ledger technology as a connector between cooperative banks to improve the efficiency of mid- and back-end operations, enhance the degree of process automation, and reduce operating costs.

Therefore, WeBank and Huarui Bank jointly developed and launched a joint loan reserve fund management and reconciliation platform based on the alliance chain in August 2016, shortening the reconciliation cycle from T+1 to quasi-real time. Through this system, the partner banks can view the reserve fund account status and reconciliation results in quasi-real time, conduct real-time position monitoring, and avoid the heavy work of reconciliation based on the end-of-day reconciliation documents. Later, Luoyang Bank and Changsha Bank also connected to the platform at the beginning of this year.

Figure: Joint loan reserve fund management and reconciliation platform based on alliance chain Source: WeBank

Focus: Exploration and implementation of financial alliance chain technology route

Blockchain and distributed ledger technology is a technology that builds a block chain data structure that cannot be forged, tampered with and traceable in a peer-to-peer network environment through transparent and trusted rules, thereby realizing and managing the generation, access and use of trusted data. Different from the traditional trust mechanism based on a single credit endorsement entity, the trust mechanism of blockchain is the common trust of multiple participants in transparent and trusted rules and trust in objective information technology.

According to the different business scenarios supported, the governance model of blockchain is divided into three types: public chain, private chain, and alliance chain. Specifically, in the cross-organizational applications of the financial industry, it involves a large amount of high-frequency information and capital flow, and there are strong supervision and high-level security requirements. Generally, the alliance chain technology route needs to be selected. Therefore, in May last year, WeBank, together with Shenzhen Securities Information Service Association, Shenzhen Financial Information Service Association and other institutions, took the lead in initiating the establishment of the Financial Blockchain Cooperation Alliance (Shenzhen) (abbreviated as "Golden Chain Alliance"). At present, the member units include 67 institutions in six major fields such as banks, securities, insurance, funds, regional equity exchanges, and technology companies.

In order to promote the technological progress and application of financial alliance chains, WeBank and Tencent have created "Blockchain Cloud Service BaaS", which integrates all the necessities for building blockchain applications in the cloud, such as blockchain underlying infrastructure, developer tools, templates, resources, etc. Blockchain Cloud Service BaaS has been released on the Tencent Cloud platform. Connected institutions can easily build their own alliance chains and control the node identities on the approval blockchain.

Figure: Blockchain cloud service BaaS architecture diagram Source: WeBank

The blockchain cloud service BaaS is open to members of the Golden Chain Alliance. The joint loan reserve fund management and reconciliation platform is also based on this BaaS version. Shanghai Huarui Bank, Luoyang Bank, Changsha Bank and other institutions connected to the joint loan reconciliation platform are all members of the Golden Chain Alliance.

Sublimation: A blockchain underlying platform that can withstand the test of production environments

After more than half a year of zero-failure operation in the production environment, the blockchain ledger of the joint loan reserve management and reconciliation platform has recorded and stored millions of transaction data. The functions, performance, fault tolerance, reliability, security, confidentiality, traceability, modularity, maintainability, portability, interoperability, data consistency and other characteristics of its underlying platform have also been verified to meet high standards.

At the same time, the blockchain network and the original bank's core system are completely independent at the logical and physical levels and do not affect each other. Data communication and storage are encrypted to ensure the safe operation of data throughout the process, complying with the strict requirements of strong supervision and high security of banking information technology.

Ultimately, if you want to successfully use blockchain technology, first of all, you need to change the traditional "centralized" business model thinking, move towards professional division of labor, open cooperation and value sharing, and embrace the new business form of "distributed business". Secondly, new technologies must be fully verified and promoted in application scenarios, especially enterprise-level application scenarios with massive users, in order to judge their maturity. In the past few years, although blockchain applications have continued to emerge, most of them are still in the laboratory stage and small-scale exploration stage, which is also due to the lack of real large-scale application scenarios.

WeBank's joint loan reserve management and reconciliation platform based on the alliance chain just meets the above conditions. On the one hand, blockchain technology is used in the already mature distributed business model - inter-bank joint loans. The platform, as a peripheral function module supplement to the original system, has achieved the goals of shortening the reconciliation cycle, improving operational efficiency, and reducing operating costs. On the other hand, multiple core banks jointly participated in the development and contributed real production data to test the robustness of the platform, reflecting the superiority of "multi-center" joint participation.