OCBC Says Strikes A First Blow In Southeast Asia For Blockchain Tech

Tom Burroughes

15 November 2016

, one of the “big three” locally-headquartered Singapore banks alongside DBS and United Overseas Bank, says it has become the first Southeast Asian bank to make cross-border and local interbank fund transfers through blockchain, the technology most associated with the controversial bitcoin currency.

A pilot payment transaction between the lender and its subsidiaries, OCBC Malaysia and Bank of Singapore, was carried out last week using a blockchain solution designed by OCBC Bank and local banking payment solutions company BCS Information Systems, a statement from the bank said.

The platform is designed to allow interbank payments in Singapore and abroad while cutting out the need for a payment intermediary, a sign of how this new technology is thought to be revolutionising the handling of sensitive information.

Blockchain, according to one definition, is a “distributed database” maintaining a continuously-growing list of records, known as blocks – hence the name. Each block contains a timestamp and a link to a previous block, which is where the chain comes in. Blockchain is associated with the digital currency bitcoin because it serves as the ledger for bitcoin transactions. However, it is argued that blockchain technology has uses far beyond monetary systems and can handle the transfer of sensitive information, such as legal documents.

Banks, including those in Asia, have been busily setting up so-called “innovation labs” to encourage the development of solutions for clients based on new technologies such as blockchain in recent months.

Bitcoin, a form of “virtual money”, is seen as controversial because it threatens fiat money systems as operated by modern central banks and is almost anonymous. This, critics say, creates opportunities for dirty money transactions. Defenders say its challenge to the conventional monetary order is precisely its point at a time when central banks threaten to cause inflation through massive quantitative easing.