BOCHK: Completed the first blockchain property valuation and will expand to trade finance applications

Reporter: Lydia

At present, banks usually process documents manually when conducting property valuation. Property valuation companies send valuation information to banks by fax or email, and banks manually enter the information into computer databases. This is not only very time-consuming and increases the workload of banks, but also cannot be 100% accurate. The promotion of blockchain technology is an important page in the banking industry's move towards electronicization.

Yesterday, Bank of China (Hong Kong) officially announced that it had completed the first property valuation using blockchain technology, and that it is expected to be applied to trade financing in the next step.

Bank of China (Hong Kong) Limited ("BOCHK") is one of the major listed commercial banking groups in Hong Kong. It has the largest branch network and diversified service channels in Hong Kong, including about 220 branches, more than 1,000 self-service devices, online banking and mobile banking and other efficient electronic channels, providing diversified financial and investment services to individuals, various enterprises and institutions. BOCHK is one of the three note-issuing banks in Hong Kong and is also the clearing bank for RMB business in Hong Kong. With its advantages in RMB business and close linkage with its parent bank, Bank of China, it provides comprehensive and high-quality cross-border services to multinational companies, cross-border customers, mainland "going out" enterprises, as well as central banks and supranational institutional customers.

BOCHK has officially launched blockchain technology for property valuation and successfully completed the first property valuation with a property valuation company through this technology. The new technology will help speed up the property valuation and loan approval process, improve efficiency, and promote the development of financial technology in Hong Kong.

Blockchain technology uses distributed ledger technology to create and transmit complete and encrypted data, which helps to improve the traceability of data and ensure the accuracy of data. At the same time, banks can use this to streamline the process of verifying valuation reports and save costs; property valuation companies no longer need to provide paper property valuation reports, which helps promote paperless green finance.

Zheng Songyan, General Manager of Information Technology Department of Bank of China (Hong Kong) Co., Ltd., said at the press conference: "BOC (Hong Kong) Co., Ltd. is currently cooperating with two property valuation companies. In order to expand the application of blockchain, the bank will invite other valuation companies and banking peers to participate in order to enrich the property valuation information in the blockchain. He believes that more valuation companies will join in the future, and the blockchain system also hopes to connect to credit record databases, property ownership data companies, lawyers, etc." He said that a Chinese bank and a Hong Kong bank are negotiating to join the Bank of China blockchain system, and it is expected that they will also apply it to property valuation by January next year at the latest. He also said that the more participants there are, the higher the efficiency will be, and there is no plan to charge participants for the time being. In addition, as for whether blockchain technology can help save costs and whether it means that it can also reduce the mortgage costs of citizens, Zheng Songyan said that bank pricing is related to costs, and he believes that blockchain technology will benefit customers.

Cheng Songyan emphasized that the successful launch of the property valuation blockchain technology was thanks to the support of the Hong Kong Monetary Authority (HKMA).

Zheng Songyan

Mr. Raymond Lee, Executive Director of the HKMA, said: “The HKMA welcomes banks’ efforts to demonstrate the value of distributed ledger technology in their banking operations through proof-of-concepts. We congratulate BOCHK on its successful implementation of distributed ledger technology in the valuation process of its mortgage business. The experience gained from this research project will be crucial in driving other proof-of-concepts in Hong Kong. The HKMA will continue to encourage banks to enhance user experience and operational efficiency by implementing innovative technologies and promoting new solutions while protecting customers and investors.”

Cheng Songyan revealed that BOC (Hong Kong) is collaborating with three to four other banks, with the HKMA coordinating the research on the application of blockchain in trade finance. It is believed that the preliminary framework and operational procedures can be completed within half a year.

In addition to the building mortgage process, BOCHK will continue to actively explore and research the application of blockchain technology in other areas, including trade financing, electronic document management, and cross-border payments.

BOC currently processes more than 20,000 valuation reports each year. Zheng Songyan predicts that even if all banks in Hong Kong use the same valuation blockchain in the future, the system will be able to handle it.

As for the next application area, he expects it to be trade financing. The bank is currently identifying which trade financing steps are suitable for blockchain and hopes to work out the relevant requirements, system construction, and framework processes within half a year.

In addition, Zheng Songyan said that Bank of China (Hong Kong) will launch branch vein biometric authentication as early as next month, and is also studying the introduction of vein biometric authentication for ATM withdrawals to replace passwords.

BOC (Hong Kong) expressed its hope to bring more innovative concepts and application cases to the application of financial technology in the financial industry, so as to benefit both financial institutions and consumers and promote the development of financial technology in the banking sector.

Finally, Cheng Songyan expressed his hope that if the banking industry is independent and each establishes its own unique blockchain technology, customers may be charged a fee for using blockchain transactions, and the scope of information that can be shared will also vary from bank to bank, failing to achieve network sharing. Therefore, he believes that the most effective approach is for the HKMA to act as an intermediary to unify all blockchain technologies so that the banking industry only uses one model of blockchain, which will enable blockchain technology to be popularized throughout Hong Kong more quickly.