Financial institutions are still developing uses for blockchain, with the latest test coming from The Bank of Tokyo-Mitsubishi UFJ and Hitachi, which are using the technology for issuing, transferring and collecting electronic checks.
Blockchain, the technology underpinning digital currencies like bitcoin, allows companies to share distributed data and move that data securely and swiftly inside and out of an organization. The technology has uses that range from payments to securities trading, but there are also some risks.
In Japan, the system developed with Hitachi allows the bank to issue and settle checks, with companies under the Hitachi Group receiving the digital check and depositing the funds, the technology giant said in an Aug. 22 news release. Digitizing checks allows companies to automate intermediaries' workloads, avoid any tampering of data or information and speeding up the settlement process.
BTMU has also run proof-of-concepts on blockchain-based promissory note trading and digital currency this year. Hitachi said the technology can also be applied to payment and supply chain finance in non-financial sectors.