China primed to push advances in blockchain and 5G development
Financial services, particularly digital currency, payment processing, and market trading and settlement leading blockchain usage
Mainland China is primed to become a global leader in the implementation of blockchain, the distributed ledger technology behind cryptocurrency bitcoin, as the central government reinforces the creation of digital intelligent services in the country, according to industry experts.
That development is expected to run in parallel with preparations being made by the mainland’s telecommunications industry to roll out advanced 5G mobile services by 2020.
“When 5G, the Internet of Things and autonomous driving start to get more prevalent then blockchain could potentially become the underlying ledger to record transactions and maintain trust in those applications,” Vijay Mayadas, the senior vice-president of corporate strategy and head of blockchain strategy at Broadridge Financial Solutions, told the South China Morning Post.
Mayadas pointed out that blockchain standards in the most significant areas of financial services, such as clearance and settlement, reference data management and know-your-customer utilities, would likely be finalised by 2020, thanks to the work of various blockchain consortia and forward-looking government regulators.
For 5G, the current timetable of the International Telecommunications Union – the United Nations agency responsible for drawing up a single global standard for 5G – has an agreement on the specifications reached between 2019 and 2020.
According to global consultancy Accenture, the financial technology known as blockchain represents a secure transaction ledger database that is shared by all parties participating in an established, distributed network of computers. It records and stores every transaction or exchange of data that occurs in the network, essentially eliminating the need for a central authority and providing greater transparency for regulatory reporting.
The initial interest in blockchain has largely been in financial services, especially in digital currency, payment processing, and market trading and settlement.
An industry survey released earlier this month by US management consulting firm Bain & Company and financial technology provider Broadridge estimated savings to global financial market ecosystems from adopting blockchain technology would be between US$15 billion to US$30 billion.
It found more than 80 per cent of international financial market executives interviewed expect blockchain to be adopted by financial institutions from 2020.
“China has a very large, integrated and highly domestic [financial services] market infrastructure that can drive blockchain a lot more quicker than the US,” Mayadas said.
A report this month by Accenture Labs, the consultancy’s research and development arm, said the potential disruptive value of blockchain has expanded to other areas.
Those include consumer data, in terms of health care records, travel documents, and employee benefits and insurance; commerce, including retail payments, secure messaging, content management and smart contracts; and public services, such as global criminal records, census and so-called smart elections.
China’s advantages in blockchain applications is highlighted by major start-up innovation in digital currency, as two-thirds of bitcoin’s global infrastructure has been set up on the mainland, Emmanuel Viale, the managing director at Accenture Labs in France, said over the weekend.
The People’s Bank of China, the country’s central bank, has also reportedly completed its trials for a national digital currency.
In addition, Viale said the central government has rolled out policy support for blockchain development in its 13th Five-Year Plan on Informatisation from 2016 to 2020. Informatisation refers to the extent an economy is becoming information-based through telecommunications, media and technology.
The latest five-year plan, for the first time, has focused on developing advanced technologies, such as big data, artificial intelligence and blockchain, Viale said.
Accenture identified Alibaba Group affiliate Ant Financial Services, WeBank and Ping An Insurance among the big mainland players testing blockchain. Alibaba owns the Post.
“China’s financial services companies have an advantage over many global competitors because they are not hobbled by outdated legacy systems,” said Albert Chan, the managing director for financial services at Accenture China.