ChainDD Exclusive | Industry Survey: Case Study of Japanese Blockchain Transformation of Traditional Financial System


Nov 30, 2019

摘要: In addition to Japan Bank Union, major small and medium-sized start-ups have also been involved in the blockchain industry. This article analyzes in detail the application of Japan's "blockchain +" in the financial system.

In Japan, the discussion on the practical application of blockchain and distributed ledger technology started very early. As early as December 1, 2016, Japan introduced the "Related Instructions on Holding Blockchain Technology Utilization Possibilities and Related Issues Seminars", and held two discussion meetings on the application of blockchain technology and related topics on December 20, 2016 and March 8, 2017.

The results of Japan Bank Union: playing the role of a big banker

In early July of 2019, Japan Bank Union announced that it is expected to provide members with scanning QR code online payment services in the summer of 2020, and announced cooperation with seven companies such as KDDI, which made payment codes compatible with each other and users can use Apps as soon as they download them. That means Japan Bank Union has been ready to seize the opportunity of the Olympic Games to win the Japanese financial services market.

According to the previous report by ChainDD, Bank of Japan (Central Bank) President Toshihiko Kuroda delivered a speech at the 2019 Fintech Summit hosted by the Japan Financial Services Agency yesterday (September 4); he believes that technology should change lives, and banks should also actively work closely with innovation and entrepreneurial enterprises to achieve the function of "big bankers ", so as to provide better services and achieve a new round of growth.

Application areas of "blockchain + finance" in Japan

At present, the application of blockchain technology mainly involves eight major areas, which are "remittance, settlement", "financial trade", "bond transaction", "loan transaction", "financial derivative product transaction", "main bank system", "standardized management" and "cross-stock trading".

Among them, the most widely used fields are "remittance, settlement" and "financial trade". Because the current problems in these two major domestic areas are very obvious, and the characteristics of blockchain technology can just make up for these shortcomings, the use of blockchain technology in these two areas has become an expanding trend. In addition, including the field of stock trading, the related applications of blockchain / distributed ledger technology have also begun.

Remittance and settlement: the basic application of "blockchain +"

Remittances and settlements are financial services that are most closely related to our daily lives. They are also one of the first areas where Japanese banks and financial systems used blockchain technology.

The development of network technology has allowed it to penetrate into the lives of the general public. Bank transfers with the purpose of payment and remittances, as well utilities remittances can be done very conveniently through the network. The discussion of the application of blockchain technology in improving the exchange transaction system has been extensive. Especially in cross-border transactions, the distributed ledger technology shows the following four advantages: transparent transactions, lower fees, faster transaction speeds, and higher availability.

In October 2016, SBI Ripple Asia, jointly founded by Japanese SBI holding company and Ripple, headquartered in San Francisco, USA, led the creation of the "International and Domestic Exchange Business Integration Research Association". Association members are 42 banks including Japanese giant Mizuho Bank, and other online banks and local banks.

At the 2019 FinTech Summit hosted by the Japan Finance Agency (September 3), Kitao Yoshihisa Kitao, president of Japan SBI Holdings, proposed the concept of "the fourth largest bank": the core is cryptocurrency and the extension is financial services. He said that the establishment of the fourth largest bank can not only help banks transform to the next generation, but also make a huge contribution to Japan's regional revenue generation. For details, please refer to the previously exclusive report of ChainDD: SBI Holding proposes the idea of "the fourth largest bank" with the core of cryptocurrency.

Trade Finance: The Most Promising Application of "Blockchain Plus"

The import and export business involves multiple parties such as buyers and sellers, logistics companies and customs, and the transaction procedures are very complicated. Through blockchain trade finance, banks can provide a certain amount of financing for international trade activities, so that sellers can get the payment faster, and buyers can avoid the risk of losses due to overdue products to a certain extent.

The current transactions in Japan are mainly based on paper-based agreements. Considering the complexity of transaction procedures, it is very troublesome to confirm the progress of signing the contract and confirm the circulation of the goods, and thus it will take a lot of time and money. In order to solve this problem, the distributed characteristics of the Japanese blockchain have become the focus of attention.

At present, many companies in Japan have started relevant research. For example, Japan's Mitsui Sumitomo Bank and Japan's IBM cooperated to conduct relevant experiments on the application of blockchain technology in the field of trade with 2017. The trading platform built using blockchain technology can not only check the progress of contract signing at any time, but also conveniently check the circulation of goods and realize the integration of management. In addition, through the introduction of external systems, linking AI and Internet of Things technologies, the trading platform has the possibility of further evolution.



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