One of China’s ‘Big Four’ banks wants to use blockchain for financial operations
In terms of total assets, the Industrial and Commercial Bank of China (ICBC) is the world’s largest. It also makes up one of the “Big Four” commercial banks in the country, all of which are controlled by the government. Having a great deal of assets under its control and the approval of the state to operate, it is taking the initiative to introduce a blockchain system that would be used to manage the exchange of all its financial assets.
The bank filed a patent for the system in January, but only announced it last Friday. The bank hopes to create a platform that would allow financial institutions, if they chose, to operate as nodes on a larger distributed network.
The system is designed so that when one institution introduces a transaction request, the request triggers the creation of a smart contract. That smart contract would then automatically seek validation by all the nodes on the network according to information, such as account balances, transaction amount and sender name, provided in the contract. Once a certain pre-defined number of validations are received, the transaction would be acknowledged as complete.
According to the ICBC’s patent filing, “The traditional transaction chain that is built around a centralized credibility system incurs problems like the high cost, low efficiency, low stability, as well as inflexibility. This impedes the bank’s launch-to-market process to meet the rapidly growing demand for innovative financial products.” The bank added that it decided to pursue blockchain technology due to the slowness and costs associated with cross-border transactions for financial instruments and for ordinary payments.
This isn’t the first time the ICBC has sought a patent for a blockchain-based system. In April, according to the China State Intellectual Property Office, the bank filed a patent for a system that is able to verify customer data using a distributed network.
The ICBC surpassed Wells Fargo as the world’s largest bank in January 2017, in part due to the repeated embarrassments at the former top-spot holder. At the end of the year, the company controlled around $3.6 trillion worth of assets.
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