Several banks in China are have jettisoned traditional processors and are now depending on the China blockchain platform to help complete financial transactions. So far, more than 20 banks in Chongqing China have utilized this blockchain-powered finance processor to settle over $56 million worth of foreign trade transactions. According to Chongqing Daily, after a year-long pilot program, the China blockchain platform completed a total of $460 million trade financing transactions.
China Blockchain Platform: The Future of Banking?
The China blockchain platform has gradually become the norm for many banks in the country. The platform brings a new level of authentication to the table, allowing stakeholders to automatically verify credit information, export receivables, and tax documents. This near-instantaneous attestation ability not only cuts costs and saves time, but also reduces manual intensive processes, the chance for errors, and eliminates excessive bureaucracy. With the success of the pilot phase, many Chinese regulators hope that this technology, when implemented on a large scale, could completely digitize China’s financial data and allow for secure and swift data sharing.
In light of the current coronavirus pandemic, people are practicing social distancing. Presently, many people are turning to digital banking to complete their financial transactions. Blockchain-powered financial processors could make banking faster and much more convenient in these times. The China blockchain platform has played a vital role during this crisis. During a period of heavy quarantining, the Chinese Construction bank was able to grant a loan of $153 million to a local tech company by utilizing this platform.
Blockchain Banking vs. Traditional Banking
With the miraculous blockchain technology intruding into the financial sector, many banks saw this relatively new tech as some form of competition. This fear was partly due to blockchain enthusiasts touting the technology as the apocalypse of traditional banking as we know it. The rise of cryptocurrencies didn’t seem to help matters; it shows that many people have dissatisfaction with the current banking system. Blockchain-powered currencies appeared to be a suitable alternative. These blockchain alternative payment systems appear to provide faster and more secure service. Adding fuel to the fire was the fact that these cryptocurrencies completely decentralized finances, ending the control most banks have over their customer accounts and funds.
However, this sentiment is gradually changing. Now, it appears that blockchain will no longer end banking, but it may be a useful tool to help tremendously improve banking capabilities.
Alternative such as Ripple
For instance, cryptocurrency oriented projects like Ripple are now being explored by banks all over the world seeking to upgrade their cross border service and create useful products. These banks have learned that if you cannot beat the competition, then the next best thing to do is join them.
With banks committing to different blockchain projects, it is no longer a question of blockchain vs. traditional banking. This is because traditional banking is now becoming blockchain banking, as several of these banks have started integrating blockchain into their operational structure. Although the antagonistic sentiment towards cryptocurrency is generally prevalent within the financial sector, banks now see the underlying technology (blockchain) powering this new type of currency as an accessory instead of a threat.