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The second bank of South Korea is in the middle of the launch of a blockchain-based system designed to reduce human error.
Shinhan Bank is using the blockchain for IRS (Interest Rate Swap) transactions. The bank allegedly implemented this system at the end of November, local news.
Interest rate swaps can become quite complicated, but fundamentally they are a type of futures contract based on the exchange of an interest rate between a certain number of parties. Two or more parties can enter into a swap contract and agree to pay each other on the basis of an increase (or decrease) in interest rates. It allows the parties involved to cover the risks and manage the debt.
"Prior to the blockchain-based process, there were no standardized rules for maintaining and managing financial records, one reason that market participants had to rely on their own records that often caused errors despite the process requirement. of cross-checking, "a Shinhan spokesman said.
The new Shinhan Bank system aims to simplify the IRS exchange process by reducing the need for cross checks and audits. Although the bank remains cautious with the launch of the platform.
The bank plans to implement the system once it has been deemed fairly stable, according to bank officials.
Of course, however, the system is not entirely autonomous and is still based on humans to enter data, so human error is not completely eradicated. As with any new system, there will be a learning curve to adapt to. It remains to be seen how much it will reduce the human error.
Published 10 December 2018 – 11:38 UTC
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