Blockchain has significant potential to disrupt B2B payments in the name of digitization and security. And with paper checks as some of the most manual and least secure corporate payment technologies in use today, it could be a good place for blockchain disruption to start.
Japan’s largest bank, Bank of Tokyo-Mitsubishi UFJ (MUFG), is reportedly testing blockchain technology to digitize the paper check, reports said Monday (Feb. 20). The bank is testing a proof of concept, first announced last year, in Singapore using the Monetary Authority of Singapore’s “regulatory sandbox,” reports explained.
“The project is to digitalize entire check processing — from issuing checks to clearing checks,” said MUFG Asian Systems Office General Manager Hirofumi Aihara. “From a bank’s perspective, we need to process these papers manually, including checking for fraud, etc.” Accelerated settlement times, he said, is just one argument to digitize the paper check.
“Of course, we can digitalize checks without blockchain,” he said, “but blockchain has very powerful features.”
The executive pointed to its heightened security that can automate checking for check duplication and other areas of fraud with which the paper check struggles.
The bank is working on the solution using the Singapore central bank’s FinTech regulatory sandbox, first announced late last year, that enables FinTech innovators to explore and innovate with FinTech yet still assure they are in regulatory bounds.
Singapore has made other recent efforts to promote FinTech innovation. Earlier this month, the nation’s central bank announced plans to ease regulatory burdens on venture capitalists in an effort to ensure startups, especially FinTech innovators, can more easily access funding.