Tencent’s Webank: Blockchain based buisness system is ready
At the end of March,2017, China’s first interagency consortium blockchain built by WeBank has been initiated, and its application data records have reached to 2.2Million. This application aims to optimize the bank reserve management and reconciliation process in syndicated loan service, by using the blockchain and distributed ledger. So far since its online trial operation in August 2016, WeBank Blockchain has involved Shanghai Hua Rui Bank (SHRB), Bank of Luoyang and Bank of Changsha. After half-year real production data test which has see zero error, this blockchain’s underlying platform has proved its advantages on autonomous control and security & trust. And then, WeBank is planning to bring out the open source version in the second quarter of this year.
Seize the Trend: The Opportunity of both Distributed Business and Distributed Technology
In recent years, plenty of new interagency innovation cooperation scenarios have been created by the popularization of Distributed Business” mode featuring sharing economy and value chain k. The “Distributed Technology”, represented by blockchain and distributed ledger, has gradually started to be applied into the production environment of “Distributed Business” due to its better flexibility, higher economic utility and fault-tolerance mechanism. The blockchain based syndicated loan reserve management and reconciliation platform above-mentioned can be a typical example.
The core product “WeiLi Loan” of WeBank is a pure online personal micro-credit circular consumption loan product designed for Wechat and Phone QQ users. It offers the loan by utilizing the interbank cooperation and syndicated loan mode, and 80% of the loan fund is provided by banks. As a typical scenario of “Distributed Business”, the blockchain and distributed ledger are vastly suitable for this product as the connector between these cooperative banks, in order to increase the operating efficiency of middle and back offices, improve the process automation level, and reduce the operation cost, etc.
Therefore, WeBank and SHRB cooperatively developed the consortium blockchain based syndicated loan reserve management and reconciliation platform, and then put it into pilot run in August 2016. This try has reduced the reconciliation cycle from T+1 to punctuality. Besides, the cooperative banks can use this system to check information in near-real-time, such as the reserve account information, reconciliation result, etc. And the supervision on positions can be implemented in real time as well. Hence, this can help get rid of the tedious reconciliation work which is dependent on End of Day Reconciliation documentation. And later, Bank of Luoyang and Bank of Changsha have started to use this platform at the beginning of this year.
The Consortium Blockchain-based Syndicated Loan Reserve Management and Reconciliation Platform. WeBank.
Focus: The Discovery and Practice of Financial Consortium Blockchain Technology.
The blockchain and distributed ledger are a kind of technology constructing the unforgeable, tamper-resistant and traceable blockchain data structure in PPN (Peer-to-Peer Network), by following the transparent and credible principle to achieve and manage the producing, accessing and utilizing of trusted data. Different from the simple credit endorsement based traditional credibility mechanism, the blockchain credibility mechanism is the common trust from multiple parties in transparent and credible principle , and is the trust in information technology.
According to the diverse business scenarios, the blockchain governance model is divided into three kinds, the Public Blockchain, the Private Blockchain and the Consortium Blockchain. Considering the interagency application where there will be plenty of high-frequency information and money flow, as well as the requirement of enhanced regulation and high-level security, the Consortium Blockchain is normally better for this scenario. Thus, in May 2016, WeBank has aligned some institutions including Shenzhen Securities Communication, Shenzhen Finance Information Service Association, etc., to establish the Financial Blockchain Shenzhen Consortium (FBSC). And till now, there have been 67 institution members covering bank, security, insurance, fund, regional stock exchange, technology company, etc.
In order to impulse the technical development and application practice of financial consortium blockchain, WeBank cooperated with Tencent and built the “Blockchain Cloud Service BaaS”, which integrated all of the necessities for establishing blockchain application via cloud, such as the blockchain underlying infrastructure, developer tool, template, resource, etc. Since Blockchain Cloud Service BaaS has been utilized in Tencent cloud platform, the authorized institutions can easily build up their own consortium blockchain, and control and censor the node identity in blockchain.
Figure: The Framework of Blockchain Cloud Service Baas. WeBank.
Blockchain Cloud Service BaaS is open to the members in FBSC. And the syndicated loan reserve management and reconciliation platform is operating on the base of this BaaS version as well. In addition, Shanghai Rui Hua Bank, Bank of Luoyang and Bank of Changsha, which are currently using this platform, are also the members of FBSC.
Sublimation: The Blockchain Underlying Platform which can withstand test of real application
After the half-year-long operation in production environment with zero fault, the blockchain ledger of syndicated loan reserve management and reconciliation platform has already recorded millions of transaction data. Furthermore, its underlying platform’s function, performance, fault-tolerance, reliability, security, confidentiality, traceability, module-based function, maintainability, portability, interoperability and data consistency have also been proved to reach the high standard.
Meanwhile, the blockchain network and original core banking system exist individually in logic level and physical level without any mutual influence. The data communication and storage are encrypted to ensure the entire data operation with safety. Therefore, it meet the the strict requirements tight regulation and high-level security of banking information technology.
All in all, if we want to successfully use the blockchain technology, at first, we should change the traditional “centralization” business mode, embrace work division, cooperation and value sharing to accomplish “Distributed Business” mode; Secondly, the new technology should eventually be tested and popularized in application scenarios, especially the enterprise-class application scenario with numerous users, to help judge its maturity. In the past few years, the blockchain applications have been constantly emerging, however, most of them still stay at the experimental stage or small-scale exploratory stage. And this is due to the lack of real large-scale application scenario.
WeBank’s consortium Blockchain-based syndicated loan reserve management and reconciliation platform just meets the requirements indicated above. The blockchain technology is used in the well-developed distributed business mode — interbank syndicated loan. This platform realizes the goals of shortening reconciliation period, increasing operation efficiency, reducing operation cost, etc. Moreover, multiple banks cooperate to build the platform, and contribute the real production data to test its robustness. And this represents the advantage of “multicenters’” participation