Today, Korean media outlets reported that Shinhan Bank has partnered with the Small Business Market Promotion Corporation (or SEMAS) to build a loan management platform based on blockchain. The platform will streamline verification for SMEs applying for institutionally subsidized loans.
Korea’s ‘policy loans’ are aimed at small businesses to provide them with lower interest rates and a more manageable repayment plan. Government or state-owned organizations often support them, and SEMAS announced its backing for them last month. However, these loans require a longer and more regulated application process, which can discourage SMEs.
Shinhan and SEMAS plan to use blockchain to simplify application. With immutably and transparently stored data, some documents can be verified digitally. It also allows for more efficient cross-checking and dispute resolution. This, the firms hope, will cut the number of visits to corporations and banks by half.
According to Yonhap, the bank’s President, Shin Ok Jin, said, “We expect to provide practical services that can provide convenience to small businesses.”
The project further hopes to reduce funding time from 22 days to 10 days and is slated for pilot launch early next year. Shinhan bank already has a blockchain credentialing system, launched six months ago, for verifying loan documents. It is unconfirmed whether the system is used for this project, but considering that they have the same goals and use cases, it is likely.
Cho Bong-hwan, Chairman of SEMAS, said: “Through the agreement with Shinhan Bank, which has excellent blockchain technology, we provide more convenient and valuable policy and financial services to small businesses.”
Indeed, Shinhan has many other blockchain projects. It’s an investor in fellow Korean firm Blocko, which last month launched in the UAE. Also last month, the bank revealed it will start using blockchain for credit card payments, issuing its own digital currency. Shinhan earlier announced its use of the technology for derivatives and, with Ground X, for security.