By Tang Guhan
As of the end of March, the number of blockchain companies in China numbered 456, among which 86 companies are focused in the financial industry, from the data provided by the Ministry of Industry and Information Technology recently.
Leveraged by its distribution, resistance to modification, transparency and retrospective features, blockchain technology has met the needs of the financial services industry in areas such as transactions, settlement, credit, securities, insurance and leasing businesses.
China's government has recently emphasized building a sound financial infrastructure as part of an effort to improve its financial systems to better serve the real economy.
Data from the World Bank shows that small and medium-sized companies in China can hardly get credit from banks because they lack transparency regarding corporate information. Meanwhile, the guarantee industry and social credit systems are rather underdeveloped. Blockchain could solve these problems by verifying the legitimacy of the information provided. Also, data could be automatically shared between institutions through blockchain technology. Moreover, blockchain technology could be widely used to facilitate banks' reconciliation processes.
The Webank under Tencent has already optimized their platforms for the reconciliation of accounts between institutions recently by leveraging the blockchain technologies. Suning.com's financial arm launched its blockchain blacklists-sharing platforms in February this year. The China Zheshang Bank has rolled out its "Hyperchain," which aims at transforming receivables for online payments and financing tools. The China Minsheng Bank and China CITIC Bank have joined hands in developing their blockchain technologies.
Furthermore, blockchain technologies could be widely used in various sectors, as almost all businesses are involved with transaction processes. The less it costs, the efficient and trustworthy it operates, the better for companies. Therefore blockchain technologies could upgrade the traditional industries from financial services to real economies.
However, privacy was considered as the most challenging issue regarding the applications of blockchain technology in finance.
"Different from traditional blockchain technology, Corda developed by R3 is a distributed-ledger-platform-based and blockchain-inspired system designed specifically for financial services. It is a distributed ledger technology for an IOS system," said Carl William Wegner, the Managing Director, head of Asia at R3 in an exclusive interview with the China Fortune Media Group under the Xinhua News Agency, "It offers the speed as well as the privacy needed for financial services to follow the transactions."
Will the blockchain-based fintech companies replace the traditional financial institutions in the near future?
Wegner told this journalist that the blockchain technologies would replace the banks' IT systems step by step, the replacement processes may go slower or faster depending on various industries."
Recently, Chinese regulators have tightened their reins on cryptocurrency, like bitcoins, Wegner thinks the move will not impede the development of blockchain-based applications. "We have worked with central bank regulators, and the more regulators understand the difference between bitcoin, cryptocurrency, Initial Coin Offering ICO) the more they will support the R3 systems," said Wegner.
