The Bank of Tokyo-Mitsubishi UFJ (BTMU) have partnered with tech giant Hitachi to start a Proof of Concept (PoC) test for a system created with blockchain technology that will digitalise the way cheques are used in Singapore.
Blockchain tech will be used for issuing, transferring and collecting electronic cheques whereas at the moment, the BTMU issues and settles the cheque and companies within the Hitachi Group would receive it and deposit the funds.
Both companies intend to embrace fintech and to start with the digitalisation of cheques will ensure that new financial services will become increasingly efficient. “Blockchain is a technology which makes difficult to tamper the data, sharing the data related to processes among multiple computers over networks.”
“With applying blockchain technology, it is expected to reduce system investments and to realise providing reliable and convenient financial services,” the statement read. With the adoption of this technology for cheques settlements, Hitachi and BTMU predict that similar approaches can be used for payment and supply chain finance in non-financial sectors in the future.
Last week, it was announced that the Monetary Authority of Singapore (MAS) are working towards streamlining money exchange, remittance and payments systems law into one legislation. This comes after many months of planning as Singapore moves towards becoming a fintech centre and a smart city.
Managing director of the MAS, Ravi Menon, is on a mission to transform Singapore into an electronic payments society and one that regards user experience as a priority and in turn, cybersecurity. Moving forward and toward a one payment provider, one license model means that fintech is kept in mind at all times.
"Fintech is changing the face of payments...It is not efficient for companies to be regulated under two pieces of legislation which were not written with the fintech solutions of today in mind," Menon said.
Alongside this, the MAS released a paper at the end of 2015 stating that advocated the use of regulatory sandboxes, which are necessary especially as fintech is becoming increasingly sophisticated. “The sandbox cannot remove all risks, as failure is an inherent characteristic of innovation.”
“In this regard, the sandbox aims to provide an environment where if an experiment fails, its impact on consumers and on financial stability will be limited,” the paper read.