South Korea continue to be pioneers in the use of blockchain technology. More than two years ago the Shinhan Bank in South Korea led the way for the world to use blockchain technology for the verification of gold bars. Not content to rest on their laurels they swiftly followed this by utilizing the technology for cross border remittances and interest rate swaps by applying smart contracts.
The visionaries at Shinhan Financial Investment, the very successful brokerage arm of Shinhan Bank are now investigating how to introduce peer to peer stock lending via the blockchain. If successful, this will be revolutionary as intermediaries can be totally bypassed, allowing users to borrow and lend securities directly. Although they have not revealed a timeframe for the rollout to take place, the move once again highlights South Korea's commitment to embrace blockchain technology much to the envy of many countries.
Early last year, the bank introduced a ground-breaking blockchain-based loan verification system that immediately stripped away the need for face to face interactions. This amazing innovation was the first of its kind in the country, the system massively lowered the huge associated operating costs and slow processing times with the increased efficiently instantly making the bank more attractive for remote clients.
Borrowing and lending securities have traditionally been inefficient and far too expensive for the average person to invest in. The dreadful combination of sky-high commission rates and often wildly inaccurate information deter everyone except large investors. Shinhan's peer to peer service will allow individual short sellers to borrow stock from counterparties without the need to pay high intermediary fees, and for stockholders to lend their holdings to others through a cheaper, faster platform.
Despite being one of the oldest banking institutions, Shinhan's use of blockchain technology is genuinely inspirational and after scooping the top place from Bloomberg for Innovation for the sixth straight year the future is bright for South Korea!