IBM and Bank of Tokyo-Mitsubishi UFJ Collaborate to Start Blockchain Reform in Banking

In what could be the first deployment of smart contracts in the corporate sector, IBM is working with BTMU to research the design, management and execution of contracts between business partners using blockchain technology. IBM and BTMU plan to use blockchain technology to develop the open source project Hyperledger to automate business transactions. With these projects, Singapore has the potential to establish itself as a world center for blockchain development.

Blockchain is already a reality in the business world

On September 16, 2016, an announcement was made regarding the deployment of smart contracts, and it is expected that BTMU will be able to use the technology to manage contracts based on data from the 2017 fiscal year, and IBM and BTMU will also be able to deploy the technology to manage contracts between the two companies by the end of the 2017 fiscal year.

We spoke with Robert Morris, Vice President of IBM Research Global Labs. He explained how it all works:

“‘Smart contract’ is a technical term used in blockchain, which refers to application logic that is shared and distributed on the blockchain. This means that any party to a transaction is put on the blockchain, where everything is visible and the terms can be automatically executed. For example, a smart contract can stipulate that once the goods pass a certain point and the customs authorities approve it, the amount owed will be transferred from the consignee’s bank to the consignor’s bank immediately, without any delay. These contracts are written on the blockchain, and the participants can only see and sign the part that concerns themselves.”

IBM's future blockchain plans

Although IBM plans to deploy blockchain with BTMU and emphasizes the importance of blockchain technology, it has become a big news, and IBM still expressed its willingness to contribute to the development of blockchain.

Robert Morris told Cointelegraph about their future plans, “London Stock Exchange Group and Japan Exchange Group are among the clients we are working with. However, most of the clients we serve now see the potential competitive advantages of blockchain and hope that the technology will not be made public.”

Advantages of IBM and BTMU

IBM sees great prospects for both companies. By using blockchain, IBM will be able to better play its role as a supplier. IBM's approach to establishing security, authentication and preemptive rights will not be limited to the blockchain network, but in the form of contract execution. IBM and BTMU plan to add additional information to the blockchain with a part monitoring the delivery and use of equipment. This will enable processes such as invoicing and payments to be automated between the two companies. As for BTMU, the bank's internal processes will become simpler, more convenient and more open.

Singapore Becomes a Blockchain Hub

Robert Morris was asked what role Singapore will play in the future of IBM’s blockchain project and he is very optimistic about the region’s prospects.

He said: "The Monetary Authority of Singapore is a world-leading central bank. It encourages blockchain trials and allows industry players, such as FinTechs, to participate through events such as festivals and hackathons to help change the perception of the industry and realize that smart financial infrastructure will benefit everyone in Singapore and the region."

IBM has a blockchain innovation center in Singapore that focuses on research and innovation, which is the first of its kind in the world. They are working with the Monetary Authority of Singapore, the Education Bureau, the Infocomm Development Authority, etc. to explore new possibilities in the financial and trade fields. As Robert Morris said, "Our goal is to help Singapore become the first choice for financial, trade, and business innovation, and to build it into a world-leading blockchain and cognitive technology center."