New Anti-Hacking Tech Korean Banks Failed to Join Blockchain Consortium

It has been found that Korean banks such as Shinhan Bank, KB Kookmin Bank, KEB Hana Bank, Woori Bank and the Industrial Bank of Korea (IBK) and the Korean financial institutions including the Korea Financial Telecommunication & Cleanings Institute and the Financial Security Institute recently failed to join R3CEV due to their shortage of fintech standards.

R3CEV is a voluntary consortium of global banks organized with the blockchain startup of R3. It is the first case in which the concept of bitcoin-based blockchain is incorporated into a financial institution. The initial members were eight European banks but the number of members has increased to 42, including Citigroup, Bank of America, Morgan Stanley, JP Morgan Chase, Goldman Sachs and UBS. 

The blockchain among banks is more closed and private than bitcoin transactions in which all information are open and anonymity is ensured. The former is characterized by more convenient financial transactions, lower fees and a higher level of security based on the distributed storage of transaction information. This new anti-hacking technique for the security of online financial transactions allows financial transaction data to be distributed and stored in different servers and updated with frequency.

Blockchain utilization in the Korean financial market is still in its early stage. “Once banks join a blockchain consortium, they have to disclose all their transaction information, and thus they need to have systems and personnel capable of handling the requirement first,” said an industry insider, adding, “However, Korean banks have been reliant on outsourcing and have yet to be capable of actually utilizing the blockchain system with their own engineers.”

Their failed attempt is likely to pose a burden on Korean financial institutions in general. A blockchain’s vulnerability to hacking is more and more reduced as the amount of transactions allowed to be shared and stored increases. In addition, a larger number of members is more advantageous because more costs are required for faster transactions, which means the introduction of a blockchain by Korean institutions alone has its own limit.