Mizuho Financial Group will work with Cognizant Japan to use blockchain technology in developing cross-border document sharing and a custom digital currency.
The Japanese banking group says it is focused on testing a distributed ledger technology as a way to reduce costs in the traditional centralized system business model. Distributed ledgers have emerged as a popular way to cut costs for cross-border transactions, and blockchain in general is expected to be a major focus for financial technology strategy in the year ahead.
Mizuho first outlined plans to work with Cognizant, a U.S.-based global provider of digital technology in financial services, on the document sharing initiative a year ago in an effort to minimize risks, speed up settlements, improve contractual performance, and enhance regulatory reporting.
After building an application to complete the blockchain trials, Mizuho said in a Feb. 23 press release that "the experiment successfully confirmed that a tamper-proof distributed database can be used to create an effective platform for information sharing among multiple group companies, offering cost savings and better usability."
Meanwhile, a second test allowed group subsidiaries to both issue a digital currency based on their performance, and freely transfer that currency to other subsidiaries, eliminating the need for data reconciliation among them.
Mizuho's next objective will be to determine if the use of blockchain can address the need to store and manage large volumes of data. Mizuho has made it clear it seeks to be an early adopter of blockchain technology, which uses a system of consensus formation among participants to enable transactions to take place even in the absence of a trusted central authority.
Systems using blockchain are easily auditable, have built–in protection against double entries, and make it virtually impossible to falsify transactions, Mizuho said.