Experts within the blockchain industry estimate that China’s banks are as much as twelve months behind their Western counterparts when it comes to adopting distributed ledger technology. If the Chinese government has its way, that gap may soon be closed. According to a new report from Reuters, the nation’s regulators have been pushing banks to modernize outdated systems and processes by adopting blockchain technology.
The government’s blockchain push is in large measure due to its belief that the technology can help to reduce fraud. The nations’ Ministry of Industry and Information Technology made that determination late last year, echoing the assessments of other international regulators. Meanwhile, the Chinese central bank has become a blockchain booster as well, and has been actively exploring the technology’s potential benefits.
For the Chinese banking industry, blockchain technology would not simply help to control fraud. It would also provide a way for the industry to quickly leapfrog past its current systems which often rely heavily on paper-based transactions and record-keeping. However, some observers wonder whether China’s antiquated legacy banking systems might prevent the type of rapid adoption that the government seems to prefer. As Kapronasia founder Zennon Kapron told Reuters,
"It's all nice you have a blockchain solution, but being able to integrate that back into your existing systems in a sensible way is where a lot of these organizations will be challenged."