“DeFi is an area that could be handled by banks” Shinhan Bank director
“Shinhan Bank has been researching blockchain since 2017,” said Jang Hyun-ki, Shinhan Bank’s director on digital business. “Blockchain technologies will be used in various areas, from qualification verification service, DID, custody and asset rights as well as a platform for the government’s policy finance." “Defi is an area where banks could easily exercise their capacity,” Shin said during a National Assembly seminar regarding reforms of virtual reality asset legislation on Sept. 22. # “The tokenization of digitalized assets…the outline of Korea’s CBDC is likely to emerge next year” Shinhan Bank’s director Jang said there is a growing sense of the need for tokenization of assets rights that would be exchanged on blockchain platforms. He said digital assets can largely be categorized into virtual currencies (cryptocurrency, regional currency), profit rights (real estate related financial products) and DID (decentralized identifier). Shinhan Bank has been researching blockchain with such digital assets in mind and has set the goal of commercializing new blackchain-technology based services. “Some of the services are already in practice and we expect a full commercialization next year,” Jang said. Central bank digital currency (CBDC) and DeFi are areas that banks are taking a particularly interest. Jang said a new economic paradigm shift has begun in regards to CBDC. Jang said instead of CBDC directly transferred from the central bank to retailers, the system will likely take the form of CBDC from the central bank flowing into individual’s accounts via commercial banks. “Shinhan Bank is looking into services in this regard,” Jang said. He projected that the outline of the Bank of Korea’s research on CBDC will come out next year. He said the bank is also looking into DeFi, which is current the hot potato in the industry. “I think banks could manage DeFi services through the intersection of digital asset, blockchain and financial services. It is in the realm of banks,” Jang said. # “DID app, physician loan, small merchant loans and government policy loans already use blockchain” Shinhan Bank is already applying blockchain in various fields, open to all possibilities. Especially one of the areas that is showing progress is the blockchain qualification verification, government policy related loan platform and the local DID consortium. In the case of the DID consortium, three local alliances — MyID, Initial DID Association and DID Alliance Korea — are participating. Specific services have been introduced. In the case of DID businesses, Shinhan Bank in August launched a service that verifies the person’s identity including real names by connecting with My ID’s app Zzeung. The service simplifies the identity verification process. Blockchain technology was applied on qualification verifications for deposit and loan products with an outside institution since May 2019. The area that has been applied to is physician loans. Thanks to the service, not only has the time it takes for doctors to receive loans shortened, but the weak points on private information securities have been solved, according to Jang. “Additionally, it has become possible to verify the qualifications of the lender if the loan approval has been delayed, but also the needs of the customers and the banks have been solved with minimum cost,” Jang added. On the platform for executing government policies, blockchain technology in lending government-backed loans for self-employed and SMEs has been applied since September. “Usually it takes such loans 22 days to be approved, but with blockchain technology we were able to cut it to 10 days,” Jang said. Shinhan is also currently testing a regional currency platform, private key management, Shinhan Financial Group’s consolidated verification and custody service. # “Perfect C2C impossible…finding a middle ground C2C” Jang laid out the vision on future of Shinhan Bank’s blockchain research. “They say that in the future C2C transactions will take center stage. However, a complete C2C ecosystem will be impossible,” Jang said. “The bank is looking into the middle ground [in regards to C2C].” He said the growing possibility of a public platform through blockchain or the emergence of various networks with different business purposes is an opportunity for the bank. “We plan to step up commercialization through increasing our partners and platforms,” Jang said.