Around the world, the industry that has been against Blockchain the most has been banks. However, in Korea, banks seem to be embracing Blockchain technologies. At first, many Korean banks saw Blockchain as competition. Many banks in Korea feared losing funds and customers to this new finance industry early on. However, over the past few years, many Korean banks using Blockchain technology to improve their existing services. They understand this is the future, showing just how much potential Blockchain has, especially in the financial sector.
Blockchain technologies have the potential to simplify and shorten settlement processes, speed up cross-border payments, and develop innovative loyalty and reward systems. It is almost as if Blockchain was created to solve banking overall. Banks have always had issues with security, fraud, and transparency. Blockchain solves all these problems.
It is safe to say that in 2023, we know Blockchain technologies have much more potential than just being a cryptocurrency. Blockchain’s main key features include security, immutability, efficiency, cost-saving, and, most of all, decentralization. Korean Banks are forming their own research and development sectors and investing in Korean startups based on Blockchain technologies. In addition, there is news every other month about Korean banks partnering with tech companies that use Blockchain.
Here is a comprehensive list of Korean banks using or looking into Blockchain technologies.
In 2021, they started a pilot program with the help of Ground X (a subsidiary of Kakao) that showed that a CBDC could be recognized as a legal fiat currency instead of a virtual asset. That pilot project wrapped up in December 2021.
In 2023, the Bank of Korea will focus on its second pilot project, which will be completed in June. This test will focus on offline payments and protecting individual IDs.
IBK also signed an MOU with SymVerse, a public Blockchain platform. They plan to create a supply chain operating system to improve the operation of SMEs and startups. Their aim is to authenticate identities and products via Blockchain technologies. Furthermore, they want to provide real-time information remotely and speed up approvals of contracts and settlements.
IBK Bank has also teamed up with Terra, a Korean Blockchain startup that operates a Blockchain-based payment system. They will work together to develop payment services and financial products. IBK Bank has processed more money from South Korean cryptocurrency exchanges than any other bank in Korea.
Nonghyup Bank is considered Korea’s first bank to start Blockchain-based services. Their app lets users get notifications on bills related to national taxes, fines, utility bills, credit cards, and insurance premiums. The app allows for quick and easy payment because it uses the main features of Blockchain technology. This allows it to be not only transparent but also fight against forgery.
NH Nonghyup Bank launched a mobile employee ID service using Blockchain ID technology. Therefore they are now able to manage identity authentication and protect individuals from the hacking of personal information.
NH Bank signed an MOU with law firm Bae, Kim & Lee, and a Blockchain technology laboratory called Hexlant to launch a joint institution for research and development of cryptocurrency exchanges. This new consortium will look to develop digital asset-based financial services. The Korean government has introduced a permit system for cryptocurrency exchanges. To maintain a permit, cryptocurrency exchanges must report their operations to the Financial Intelligence Unit after getting real name-verified accounts from commercial banks in Korea.
“Through the consortium, we will step up efforts to take a lead in the local cryptocurrency industry,” said Jang Seung-hyun, the senior VP at NH NongHyup Bank.
Their parent company Nonghyup Financial Group also opened up the biggest innovation campus fintech center. It houses over 30 startups looking to develop and commercialize their business ideas using technologies such as AI, Big data, and Blockchain technologies. Nonghyup Bank is one of the five Korean banks to join JP Morgan’s IIN (Interbank Information Network).
KEB Hana Bank is also a part of JPMorgan’s IIN. They are a part of the Technology and Service Alliance. They have partnered with Korean Blockchain startup Kasa Korea to issue digital real estate beneficiary certificates, and open user accounts for Kasa Korea’s Blockchain platform.
KEB Hana Bank is focused on becoming more of a data company than a traditional commercial bank in 2022. They are aggressively looking into developing digital technologies such as big data, AI, and Blockchain technologies.
“Our goal is not to adopt a digital touch while retaining our traditional banking business but to transform ourselves from a commercial bank to a data company from the core. We believe this is a path that separates our digitalization strategy from that of other banks or companies,” said CEO of KEB Hana Bank, Ji Sung-kyoo.
KEB Hana Bank is working with Korea University to foster Blockchain-based technology. They have already signed an MOU to collaborate on R&D projects and nurture Blockchain technology experts. In addition, they will share Blockchain-based data and develop Blockchain-oriented financial services and products. The first project is to apply Blockchain technology to issuing new student identification cards. They have already filed over 45 Blockchain technology patents to date.
KEB Hana Bank is also working with the Busan Government on its new Blockchain-based currency. Busan Metropolitan City has come out with a city Blockchain-based local currency called Dongdaekjeon. It is issued by the Busan Metropolitan City, and users can recharge their Dongbaekjeon card with the Dongbaekjeon mobile app or at service counters at Hana Bank or Busan Bank.
KEB Hana Bank has partnered with a government-aided highway firm called Korea Express Corporation. They will collaborate to introduce a Blockchain-powered toll payment platform throughout Korea’s highways. The platform will link KEB Hana’s smartphone banking app, Hana One Q, so drivers can make toll payments, get refunds of toll fees, and even postpone payments. Therefore this platform will do anyway with cash and credit card payments. The change aims to promote more contactless solutions due to COVID-19. This partnership has been endorsed by the Ministry of Science and ICT and the Korea Internet & Security Agency.
KB Kookmin Bank also partnered with Korean Blockchain startup Kaka Korea and KEB Hana Bank to issue digital real estate beneficiary certificates. Furthermore, KB Kookmin Bank partnered with LG to develop a joint project called Magok Pay. It will allow users to pay with smartphone tokens without cash or a bank card. All this is KB Kookmin Bank’s bigger focus for 2022 as they look to improve in many other sectors besides Blockchain technology, such as AI, Cloud, and Big Data.
KB Kookmin Bank is looking to become Korea’s first bank to offer crypto investment projects for retail investors. They formed the Digital Asset Management Preparatory Committee to look into digital assets and AI investment funds. The plan is to launch a crypto exchange-traded fund (ETF) by the end of 2023.
Shinhan Bank also partnered with the Small Business Market Promotion Corporation (SEMAS) to build a Blockchain-based loan management platform. The platform will help the verification process for SMEs and startups in Korea that are applying for institutionally subsidized loans.
Shinhan Bank already has a Blockchain Credentialing System for verifying loan documents for such services as credit lending.
Shinhan Bank has introduced a blockchain-based decentralized ID (DID) to its banking app SOL. DID is a Blockchain technology that lets users store their identities on their smartphones. They collaborated with Iconloop to create the DID service. The service can prevent the use of fake IDs and help protect financial transactions through authentication. In addition, users will be able to use the services of other financial companies without providing additional details. When a user’s name is verified by Shinhan Bank, other financial companies will only need to check the user’s fingerprint.
They have also helped nurture Korean startups by investing in Korean Blockchain startup Blocko. Shinhan Bank is one of the five Korean banks to join JP Morgan’s IIN. They are a part of the Technology and Service Alliance.
Woori Bank partnered with Ground X to co-develop relevant Blockchain services. Back in late 2019, Woori Bank started an initiative that allowed its customers to exchange foreign and domestic currency and make cash withdrawals of up to $850 at airport restaurants, fast-food outlets, stores, and parking lots. Woori Bank has also joined JP Morgan’s IIN. They are a part of the Technology and Service Alliance.
Woori Bank was the first commercial bank in Korea to accept Blockchain-powered driver’s licenses as an official form of authentication. It uses Blockchain-based distributed identity identification (DID) technology. They have gotten the approval of the Ministry of Public Administration and Security, which is in charge of Korea’s Digital New Deal project.
In addition, customers of Woori Bank can use their apps to verify their identity when making in-person transaction requests.
“We are pleased to be chosen as a service provider of Blockchain regulation-free zone, and we will try our best to make the Busan Digital Voucher as a successful case of the Blockchain industry development model,” said the Head of Busan Bank Digital Finance Department, Han Jeongwuk.
Busan Bank and Hana Bank will also work with KT to recharge Busan’s Dongbaekjeon card. Furthermore, they launched the BNK Fintech Lab 1st Stage to support fintech and Blockchain startups in Busan.
Busan Bank will work with local companies to launch a smartphone mobile app called the Regional Mobile Medical Tourism Platform. The bank will channel all medical tourism-based transactions through the Blockchain-powered application. This includes those looking for plastic surgery or other cosmetic procedures in Busan. In addition, the platform will offer currency exchange and account opening services.
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