When it was founded just before the 20th century, Shinhan Bank accepted a donkey as collateral for its first ever loan. Or so the story goes.
Things have gotten a bit more technical since then.
Korea’s oldest bank announced Monday that it had launched a blockchain-powered lending platform that makes it easier – and less time-consuming – to get a loan.
“Specifically, Shinhan Bank’s new lending system applies blockchain technology in the verification and confirmation processes within the network of affiliated institutions and banks. The system allows the parties to register and operate in the network using an encrypted one-time password, enabling easy and instant access to the data necessary for the approval and issuance of loans.”
Previously, the bank could use scraping to obtain employment certificates and income documents from government bodies and public corporations.
They couldn’t use scraping to obtain documents verifying membership in bodies such as associations, groups, unions and other bodies, however.
Customers had to obtain those documents themselves and submit them to the bank. The bank then had to verify those documents. It could be a very lengthy process.
Until now, anyway.
Though Shinhan is the first Korean bank to introduce blockchain technology into the lending process, we’ve seen experiments with blockchain-powered lending in other parts of the world.
For instance, BBVA and Red Electrica Corporation last year became the first businesses in the world to deliver a syndicated loan using blockchain. Last week, four European banks tested a blockchain platform for issuing promissory notes.
As we can see in the Shinhan announcement, there are very good reasons for banks – and their customers – to embrace blockchain technology. Â Jon Wood, head of research at trivial.co, wrote:
“The benefits for banks of utilising blockchain tech are much the same as for individual loan providers, but perhaps even more useful for larger institutions, as they can streamline and optimise their operations. Blockchain naturally connects all parties on a system, so the customer would be linked directly to the lending institution, with full transparency and a real-time view of finances on an immutable ledger. This means there is much less need for due diligence which is very time consuming and expensive — a cost which is often pushed on to the borrower.”
And also in the Korean blockchain space…
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