WeBank launches China's first banking blockchain business

At the recent International Blockchain Summit, WeBank Vice President and Chief Information Officer Ma Zhitao announced that WeBank and Huarui Bank have jointly developed a blockchain application system for the settlement and clearing of the two banks' joint Weilidai loans.

The system was put into trial operation in September. WeBank is a pioneer of emerging banks. The bank has no physical outlets and completes various financial services online with various Internet digital technologies. It is reported that its Weilidai currently has more than 10 million customers and the amount of loans issued has exceeded 100 billion yuan. However, WeBank operates based on a joint lending model with partner banks. 80% of its funds come from other banks, involving high interest, interest rate, principal clearing and settlement every day.

So, this is where the blockchain system comes in. Based on the characteristics of blockchain distributed ledger, consensus protocol management, immutability, traceability, etc., the clearing steps can be completed simultaneously during the business transaction process, instead of having to clear in a specific time period as in the traditional way, saving a lot of time and labor costs.

Specifically, the traditional financial transaction method is that both banks keep their own accounts, and then after the transaction is completed, both parties need to spend a lot of manpower and material resources to reconcile the accounts. And because the data is recorded by the other party, it is difficult to guarantee that the data is 100% correct. However, transactions and settlements based on the blockchain system, under the protection of encryption algorithms, all information is recorded on the blockchain network, and both parties update synchronously. Once a change is found, the entire network can be notified to prevent tampering.

In addition, the most important thing is that under the influence of the consensus algorithm, the transaction process and the liquidation process are synchronized in real time. Because the agreement stipulates that the bookkeeping initiated by the upstream party must be approved by the downstream party before the transaction can be completed. Finally, the transaction process completes the transfer of value and the liquidation of funds at the same time.

Therefore, for transactions completed based on the blockchain system, the efficiency of fund settlement and clearing is greatly improved and the cost can be significantly reduced.

According to Ma Zhitao of WeBank, in the future, partner banks can choose to write some information into the blockchain, and WeBank will provide unified standard on-chain reconciliation services, unified operation views and interactive interfaces, so that partner banks can fully and efficiently understand credit and fund transaction information in real time and conduct real-time position monitoring, eliminating the heavy work of relying on end-of-day reconciliation documents for clearing and reconciliation.

So far, nearly 20 banks of all sizes have been experimenting with blockchain transaction settlement technology, including UBS, Westpac Bank, Barclays Bank, etc. Sun Lilin, CEO of Juzhen Finance, a domestic bank infrastructure design based on blockchain, said that blockchain technology is still in its infancy and solutions are still being explored, but blockchain and distributed ledgers are undoubtedly a trend. It is revealed that WeBank has also established relevant research laboratories with Juzhen Finance and Wanxiang Blockchain Laboratory to explore the application and development of blockchain technology in the financial industry.