SBI Savings Bank Executive Says Blockchain Will Change Banking Operations

Blockchain technology can improve the efficiency of banking operations, speakers said at an industry event in Seoul.

Shin Joong-hyun, head of future growth at SBI Savings Bank, said at the "Bridging Finance Onchain" event held at the Four Seasons Hotel in Seoul's Jongno district on Oct. 1 that banks are systems that have endured for hundreds of years. Even so, new technology can make banking operations more efficient, he said.

Shin also laid out ways blockchain could be used to cut inefficiencies. Applying the technology to repurchase agreements, or repos, and tokenized assets could reduce the amount of liquidity required and make atomic settlement possible, he said. That would allow institutions to generate additional returns from idle funds and offer better terms to customers.

Still, blockchain should first be applied to areas of the existing financial system where change is most urgent, Shin said. Not every legacy process is a problem. Financial institutions need to understand current systems and apply blockchain in ways that fit, he added.

Takuya Sugiyama, deputy head of Digital Space at SBI Holdings, echoed Shin's remarks. The goal is not simply to tokenize existing assets but to build market infrastructure for institutions using blockchain, he said. The ultimate aim is to create a programmable financial network in which capital can move as seamlessly as information, he added.

Participants from the digital-asset industry also said interoperability between traditional finance and digital-asset infrastructure will be needed to commercialize blockchain in finance.

David Katz, Circle's head of strategy and policy for Asia-Pacific, said the technology is already fairly mature, while regulation and infrastructure are being put in place quickly. The priority now is to integrate those pieces to deliver true interoperability and institutional-grade infrastructure. Many financial institutions want fully built platforms from trusted service providers rather than building systems on their own, he added.

Kim Tak-jong, co-founder and chief strategy officer at BDACS, said the speed gap between on-chain assets and existing payment infrastructure also needs to be addressed. Assets such as bonds and securities move at on-chain speed, but the funds needed for settlement still pass through traditional banking networks. As a result, final settlement often takes place a day or two later.

Kim also said technological development is moving faster than the institutional framework. For institutions to participate in on-chain finance, the legal framework for digital assets needs to be developed to the same standard as traditional finance, he said.

Shin said broader adoption of on-chain finance will require institutional participation. Because the market is still not fully formed, the industry, including competitors, needs to work together to build the ecosystem, he said.