China Post Bank and IBM jointly build asset custody system based on blockchain technology

China Economic Net, Beijing, January 10th. Today, China Postal Savings Bank and IBM (China) Co., Ltd. held a press conference in Beijing to announce the launch of a blockchain-based asset custody system. The system was launched in October 2016 and has successfully executed hundreds of transactions in real business environments. Through cooperation with IBM, Postal Savings Bank successfully applied blockchain technology to real production environments using Hyperledger Fabric. This is the first successful practice of China's banking industry to apply blockchain technology to the core business system of banks.

Recently, the State Council issued the "13th Five-Year National Informatization Plan", which for the first time included blockchain in the national informatization plan and defined it as a strategic frontier technology. Postal Savings Bank has always adhered to the "technology-led" strategy and attached great importance to the research on cutting-edge financial products, technologies, processes, business models and commercial applications. It is reported that the asset custody system launched by Postal Savings Bank this time is based on the four major mechanisms of blockchain, namely shared ledger, smart contract, privacy protection and consensus mechanism. It selects asset custody business scenarios in which five roles, namely asset entrustor, asset manager, asset custodian, investment consultant and auditor, participate, realizing information sharing of custody business and supervision of asset usage.

The typical custody business process often involves multiple parties, including asset entrustors, asset managers, asset custodians, and multiple financial institutions including investment advisors. However, due to the large amount of a single transaction and the large number of participants, each party has its own information system, and the transaction parties have traditionally relied on repeated credit checks by phone, fax, and email, which is time-consuming and laborious.

The blockchain solution launched by Postal Savings Bank of China has achieved real-time information sharing among multiple parties, eliminating the process of repeated credit verification, shortening the original business links by about 60%-80%, and making credit exchange more efficient. Smart contracts and consensus mechanisms integrate the investment compliance verification of capital plans on the blockchain and ensure that each transaction is completed on the basis of meeting the terms of the contract and reaching a consensus. Blockchain has the properties of being tamper-proof and encrypted, which can ensure that the transaction parties can quickly share necessary information while protecting the security of account information. In addition, blockchain helps auditors and regulators to quickly obtain information, intervene and control in advance, and then improve the risk management level of the entire industry.

Lu Jiajin, President of Postal Savings Bank of China, said:

“Blockchain technology can solve the trust problem in financial activities at a low cost, and will bring unprecedented efficient exchange of trust and credit to multi-party transactions, and has the potential to promote profound changes in the financial industry. At present, financial technology is booming and financial business is constantly innovating. Postal Savings Bank of China looks forward to working with more financial institutions to jointly build a financial ecosystem based on blockchain technology.”

Chen Liming, Chairman of IBM Greater China, said:

“The successful launch of the Postal Savings Bank’s blockchain asset custody system has a huge impact on the financial industry. With the development of technology, IBM hopes to further deepen cooperation with the Postal Savings Bank to promote the application of blockchain in more fields, and help more companies build a blockchain ecosystem in China and even around the world to create a more efficient business environment.”

As China's leading large retail bank, Postal Savings Bank has more than 40,000 business outlets, serving more than 500 million individual customers, with excellent asset quality and significant growth potential. As of the end of 2016, the scale of Postal Savings Bank's asset custody business was about 4 trillion yuan. IBM is a leading global information technology, consulting services and business solutions company with operations in more than 170 countries and regions. In the emerging technology field of blockchain, the Linux Foundation Hyperledger promoted by IBM is a mature application architecture for building enterprise-level blockchain. Postal Savings Bank and IBM have carried out a number of collaborations in the field of information technology. At present, both parties are committed to jointly exploring and promoting the application of innovative technologies such as blockchain and artificial intelligence in the banking industry.