The Japanese Bankers Association (JBA) is working toward the development of a common blockchain platform for the country’s banks to begin trials of core banking processes including money transfers.
The JBA is essentially an association that represents and works on behalf of 252 member institutions that are either headquartered or operate with branches in Japan. The association includes full member banks, bank holding companies, bankers’ associations and associate member banks that include nearly 50 foreign banks with a presence in Japan.
Notably, the JBA is also the operator of the Zengin System, the nationwide payments clearing platform that supports domestic funds transfers between banks in the country. As the operator of the country’s domestic fund transfers platform, it is telling that the association is looking at new financial innovation, particularly blockchain technology.
As reported by Nikkei, the association is aiming to provide a common platform for members of all sizes to run experiments with the technology. Details remain scarce but the bankers’ association has reportedly confirmed its advent toward exploring distributed ledger technology on Thursday.
The association will reach out to tech companies for the trials, the report adds. Trials are expected to start this fall, between September and December, in Japan. Money transfers costs over a blockchain in Japan could drop up to 90%, when compared to existing costs for instant payments, according to the publication.
The confirmed announcement follows a previous report detailing plans toward a blockchain platform and sandbox a month ago. The JBA-led blockchain effort will also see regulatory counsel and support from the Financial Services Agency, the country’s financial regulator and; the Bank of Japan, the nation’s central bank.
The association is expected to shoulder the costs for banks running tests on the platform, which will come as a blessing for smaller banks and financial institutions to explore blockchain-based solutions.
Bitcoin Exchange Plugs Japan’s Megabanks onto a Blockchain
While the bankers’ association looks for a technology company to develop its blockchain platform, Japan’s so-called ‘Megabanks’ have already tested domestic money transfers over a blockchain.
The proprietary blockchain “miyabi”, belonging to bitFlyer – Japan’s largest bitcoin exchange, clocked 1,500 transactions per second during a nine-month proof-of-concept trial that concluded in November 2016. The successful trial proved that a blockchain platform for domestic money transfers was scaling beyond the 1,400 transactions/sec that the current interbank wire system is capable of, at peak speeds.
The three megabanks, Mitsubishi UFJ, Mizuho and SMBC, are also investors in bitFlyer, further proving the positive bitcoin ecosystem in a country that began recognizing the cryptocurrency as a legal method of payment this month. Bitcoin is expected to be accepted at over 250,000 stores by summer this year in Japan.
A positive outcome of this year’s trials by members of the Japanese Bankers Association could ultimately lead to the future of a blockchain-powered commercial banking industry in Japan.
Featured image from Shutterstock.
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