Hana Financial Group will become the first Korean financial institution to take part in the R3 CEV project, a consortium of financial institutions in research and development of blockchain usage in the financial system. R3 CEV is a venture formed in September last year to study and implement the technology underpinning bitcoin in real actual financial transactions, and currently is participated by financial firms across the world including Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley and UBS AG.

Hana Financial Group said on Sunday that it is to join the global blockchain consortium and adopt the technology in various financial services such as overseas remittance services and security verification.

A blockchain is a public ledger of digital currencies where all participants have access to data blocks, or information, on the financial transactions, rather than having a centralized ledger managed by a reputable intermediary such as central bank. It was adopted upon the introduction of virtual currency Bitcoin in 2008 in a bid to implement a financial system where regulations by government and central banks are unnecessary.

“The company expects to cut costs down by adopting blockchain technology to return the benefits to customers,” said an unnamed Hana Financial Group official. The company plans to fully employ blockchain technology during the course of its advancement into the global market, the official added.

The blockchain that is dubbed for an online public ledger allows users to save expenses on financial transactions as it does not require any intermediary manager to store transaction data. Moreover, it reportedly offers protection against hacking as it is almost impossible to a certain participant on the network to change record as all transaction data is shared with all other users.

Asian institutions have recently joined the bandwagon. Ripple Lab Inc., a blockchain-backed financial payment solution startup based in the United States, recently founded a joint venture SBI Ripple Asia together with Japan-based financial conglomerate SMB Holdings Inc. to make headway into the Asian market. Another Japan’s financial giant Mitsubishi UFJ Financial Group (MUFG) is developing its own digital currency MUFG based on blockchain technology.

Major commercial lenders in Korea are also taking aggressive steps into the virtual financial transaction market by collaborating with fintech companies specializing in blockchain technology. KB Financial Group put up 1.5 billion won ($1.3 million) for local bitcoin and blockchain technology venture Coinplug Inc., and Shinhan Bank invested in blockchain-based financial solution provider Streami Inc. shares worth 500 million won.

By Chung Ji-sung

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