So, why is this so important?
Well, South Korea, although being deeply involved in the cryptocurrency business, has been the center of much controversy. It is common knowledge that South Korea’s regulatory practice greatly influenced the cryptocurrency market in the past, but with the recent change of direction, some opportunities that were hard to imagine opened up.
South Korea’s government lifted the ban that they previously imposed on the usage of blockchain technology by banks so the complex and inefficient traditional payment system can now be exchanged for new, blockchain-based smart payment networks.
A national banking group in South Korea is developing a blockchain ID verification platform for domestic commercial banks, and only weeks are separating them from launch, says the announcement made by Korea Federation of Banks (KFB) on Monday.
The system is called BankSign and is being built on top of the Samsung SDS’ Nexledger platform, which, in their own words, “is a blockchain platform built for the enterprise, empowering the organization to take control of distributed transactions securely and conveniently.” Nexledger blockchain has Management Monitoring and Smart Contract features that can be utilized for digital identity verification, digital payments, and digital stamping. According to their website, it can also manage high volume transactions in real time.
Obviously, Nexledger can fulfill what they claim as the BankSign project built on their platform entered the beta-testing phase in April, right after the notorious ban was lifted. The implementation of blockchain technology in every-day banking is opening the world of possibilities for these financial institutions because, if used correctly, it can lower the costs of transactions, and enhance the transparency and security of the system, which are pivotal points for the overall sense of trustworthiness that clients feel about the bank of their choice.
Local South Korean banks involved in the KFB, primarily Shinhan and Woori, were researching more efficient cross-border payment models for business customers even before the BankSign project left the drawing board, which puts them in line with top institutions from around the globe.
The idea not to use Ripple’s xCurrent but to research and innovate, although it may raise some eyebrows, is really noteworthy and may, if BankSign succeeds, present the asset that can be materialized by the KFB for years to come, as the other financial institutions will surely show interest.
Real use cases are still sporadic in young blockchain and cryptocurrency industry, so this presents a big step for the adoption of blockchain technology in south-east Asia as the project will be among the first in South Korea to enable users to utilize the distributed ledger network.
Evolution is inevitable
How will the implementation of new technologies reflect on the banking business, and will it urge other industry branches to research and develop platforms of their own, remains to be seen, but the positive impact that projects like this can have on the future adoption, and government regulations should not be overlooked, as the legislators will accept the fact that blockchain and cryptocurrencies are just tools in the hands of the evolution.