Why blockchain is fuelling APAC’s transformation

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Why blockchain is fuelling APAC’s transformation

Consider a standard financial exchange, such as buying property.

Various intermediaries are involved, each requiring fees for their involvement. Whether that’s verifying, querying or confirming a transaction. Naturally, the more links there are in a chain, the more delays are likely to occur. The result is that buyers and sellers are regularly left waiting, without clear knowledge of how things are progressing.

As a digital ledge technology (DLT), blockchain’s transparency eliminates the need for these intermediaries and hold-ups. Supplemented by better security and authentication processes at every step – in real-time.

Of course, that’s just one transaction. If this is scaled up across the industry, banks’ infrastructure costs may be reduced by $15bn–$20bn by 2022. No surprise then, that blockchain is gaining such traction worldwide.

Within Asia-Pacific, there are particular reasons why the technology will have a major impact during 2018. These include:

Fintech funding on the rise

APAC’s blockchain startups received £10.5 billion of funding in the first nine months of 2016, more than doubling 2015 levels of investment. While this represents tangible capital, elsewhere it’s all about digital currency.

Because while demand for bitcoin is skyrocketing elsewhere, the region has been focusing on creating its own cryptocurrency. The MUFG Coin incorporates blockchain technology, to ‘be applied for a variety of everyday financial needs, such as withdrawals and deposits to transactions and payments’.

A spirit of collaboration

Financial innovation firm R3 has collaborated with Singapore’s central bank and financial regulatory authority, the Monetary Authority of Singapore (MAS) to launch a dedicated Asia Blockchain Centre of Excellence. This is supported by banks including JP Morgan, HSBC and Mitsubishi UFJ, helping cement Singapore’s reputation as a fintech hub.

The APAC region also benefits from regulatory sandboxes. Companies can test out new financial products and services without having to adhere to the usual regulations. Agile, scaling, and with a MVP approach. Once there’s a Proof Of Concept, the sandbox can be lifted and the product/service can be formally launched.

The cashless society

APAC has embraced mobile banking, with 110 billion finance app sessions taking place across the region during 2016. This compares to 75 billion in the US and 50 billion in Europe. Singapore in particular is proving to be a hotbed of mobile payment innovation. Its government-backed drive to be a ‘Smart Nation’ includes a push to become a ‘cashless society’.

The MAS has established a Payments Council, comprising 20 finance leaders, aiming to unite providers and users of payment services in Singapore. “Our mission is to make e-payments simple, seamless, and secure for all Singaporeans.”, explains Ravi Menon, the council’s chair.

Artificial intelligence

Initial blockchain conversations and use cases centred around cryptocurrency transactions. However, advances in artificial intelligence are opening up a new world of blockchain-related opportunity. Particularly in areas concerning the sharing of innovation, through open source approaches.

What’s in store

While it’s still early days for the distributed ledger technology, the signs are all pointing to a 2018 surge.

While complex, the principles behind blockchain can be applied cross-industry. Any process that currently involved intermediaries can be adapted. Earlier this year, Google’s DeepMind technology applied a digital blockchain-based ledger to crunch volumes of NHS patient data, tracking its whereabouts in real-time. Because blockchain is distributed, this means no more centralised databases for hackers to attack.

There’s one thing that will determine whether blockchain’s potential is to be realised fully. Data. More specifically, the sharing of data.

It’s clear that for APAC, and indeed the rest of the world, we’re only at the end of the beginning stage for blockchain.