China Minsheng Bank has emerged as one of the most enthusiastic adopters of blockchain technology in the Chinese banking sector, as lenders increasingly turn to fintech to improve their competitive capabilities.
China Minsheng Bank is already applying blockchain technology to the two key areas of traditional finance – forfaiting and letters of credit.
In October 2018 China Minsheng teamed up with Bank of China and China CITIC Bank to launch a blockchain-based forfaiting transaction platform, which in its inaugural month of operation processed a total of 6 transactions worth 30 million yuan.
Over a year previously in July 2017, China Minsheng Bank also teamed up with China CITIC Bank to launch the Block Chain based Letter of Credit System (国内信用证信息传输系统), which on its first day of operation completed a 100 million yuan LC operation.
The success of the system earned it 2nd place in the Chinese central bank’s tech development awards for 2017.
Prior to this China Minsheng Bank first flagged its blockchain ambitions by publicly announcing in November 2016 that it had joined the R3 blockchain association.
“The blockchain will change the core standards of the financial system, as well as have an overwhelming impact upon the foundation systems of the existing banking system and relationships between participants,” said Niu Xinzhuang (牛新庄), head of information technology at China Minsheng Bank, according to a report from Weiyangx.com.
“China Minsheng Bank has already fully embraced the blockchain.”
Niu said that China Minsheng is currently exploring the use of blockchain technology to create “financial judicial chains.”
“During periods of overall economic downturn banks face a large number of lawsuits,” said Niu.
“We have decided to use blockchain technology to resolve this problem, and have established a platform to launch procedures online once a dispute arises, as well as permit the direct provision of evidence via the blockchain, including the provision of judicial evidence.”
Another area of application is improvements to risk management when extending credit to smaller borrowers and members of private enterprise.
“Via the application of blockchain technology, financial institutions can establish credit blacklists of small and micro-enterprises,” said Wen Bin (温彬), chief researcher with China Minsheng Bank.
“If we can use cooperation between institutions to establish a small and micro-enterprise blacklist covering all of society, we will be able to effectively screen out certain high-risk enterprises.”