The latest patent filed by The Industrial and Commercial Bank of China (ICBC), one of China’s “Big Four” state-owned commercial banks and the world’s largest by total assets as of 2017, reveals the bank’s aim of using the blockchain technology for the exchange of financial assets.
The patent application filed by The Industrial and Commercial Bank of China (ICBC) back in the first month of this year and released on Friday, 6th July shows that the system aims to build a platform in which all actively participating institutions can function as nodes and in turn go on to form a distributed network.
As and when a transaction request has been initiated by a user from one institution, a smart contract instantly gets activated causing every single node to authenticate the transaction based on the information provided, which includes the sender’s name, transaction amount and account balance. Once the network receives adequate validations from participating nodes for consensus above a pre-determined threshold it would be considered that the transaction has been successful.
According to the data published in the patent filing, the main aim of this proposed concept is to completely eradicate intermediaries in the pre-existing system and bring more liquidity to financial assets.
In the filing, the ICBC also revealed the reason for improvising the existing system by claiming that the traditional system is slow and it also costs a fortune when sending cross-border or interbank transactions not only for financial tools like precious metals and futures products but for ordinary payments as well.
According to the document:
“The customary transaction chain based on the centralized credibility framework is accustomed to causing many problems like low efficiency, low stability, high cost and also inflexibility. This, in turn, obstructs the bank’s launch-to-market process to meet the rapidly growing demand for inventive financial products.”
As per the China State Intellectual Property Office, this patent application denotes the latest patent filing by the bank that is related to blockchain technology.
It has also previously been reported by Coindesk that the ICBC also aims to patent a blockchain system that could verify handler information over a distributed network.
Notably, a news report published in the South China Morning Post reveals that ICBC successfully overcame Well Fargo to be known as the largest bank all over the globe by total assets as of January 2017.
According to ICBC’s latest financial report, the institution held 24.9 trillion yuan ($3.6 trillion) in assets as of the end of the previous year (2017).