Japanese banking group BTMU and Hitachi to develop blockchain check processing system

Bank of Tokyo-Mitsubishi UFJ (BTMU) and Hitachi are collaborating on a blockchain-based check payment processing and verification system.

The research was carried out in Singapore, where 60% of transactions are conducted by cheque. The collaboration also marks the first step for Japanese banks to develop financial technology overseas, where they have lagged behind.

The collaboration focuses on technology products and systems, with the goal of developing a prototype that officially enters the testing phase today, with plans to launch the system as early as 2018.

The system is mainly aimed at local businesses and banks, and its application may not be limited to check payments.

For Hitachi, the success of the system will bring it a steady stream of orders, while BTMU aims to establish a competitive advantage in Asia through the development of financial technology.

Blockchain technology can provide a fast and low-cost payment processing and transaction method. Traditional handwritten checks take two to three days to clear. This new blockchain-based system can process payments in real time and reduce the risk of fraud.

Financial industry observers point out that Japanese banks lag behind their Western competitors in financial innovation. But BTMU is not sitting still. BTMU is developing its own blockchain-based digital currency, MUFG coin. In addition, it invested more than $10 million in Coinbase in July this year.

BTMU also sees Asia as an emerging market for its development of financial technology. The potential demand for financial technology in Asia is much higher than that in Japan.

Asia is not only a potential market for Japan, but its geographical location also facilitates the development of Japanese banks and technology companies, many of which have already taken root in Asia. Hitachi Group has long established a close cooperative relationship with Singapore's financial sector. BTMU and other banks believe that Singapore is the base for establishing an Asian financial structure.

In order to become a leading financial services center, Singapore has opened its doors to all kinds of innovations. It provides a "regulatory sandbox" for financial technology experiments and a relaxed regulatory system for developers. I believe BTMU and Hitachi Group will also benefit from this.